Scenario planning and annual budgets

7 01 2010

Did you make a annual budget for 2010?

Bet it wasn’t easy.

Did you think about all the different scenarios that might happen in 2010, and incorporate those variables into several budgets, or was your final product one single annual budget?

I am not a fan of annual budgets unless they are tied into Scenario Planning.

I believe that they are a necessary exercise that helps in anticipating what revenue and resources a company might require in the coming year.  But I truly dislike those who compare real results with a static budget created 6 months or a year prior.

Businesses cannot perform  “as planned” in rapidly changing environments.  Budgets can serve as guides for spending and investment if properly assembled, taking into account internal and external factors of influence.

I am almost sure your budget made in October or November needs to be redone (if you want it to reflect real results) in order to reflect the massive changes that have already occurred in the economy and business environment.

In chaotic times, when uncertainty is the only sure thing, the traditional budget process can be a waste of time for the people making them, and for those “using” them if scenario planning is not taking place.

When the environment is subject to so many significant changes that will affect our suppliers, costs, customers consumption, international competition, etc., it is wiser to make several budget scenarios.

These scenarios will contemplate and plan for possible (or impossible) significant changes in the business environment, and help the organization to quickly take advantage of the situation when and if they occur.

What if oil prices plummet, or skyrocket?

What if inflation takes off, or recession gets worse?

What if there is a massive terrorist attack?

What if there is an economic collapse in Asia?

What if our number one supplier closes their doors?

What if the automobile and construction industries fall deeper into a slump?

What if the USA puts huge import duties on imported products?

It’s not about guessing what will happen (traditional budget).

It’s all about preparing to what MIGHT happen (budget scenarios).

How many scenarios should a company create?   As many as possible in order to analyze the strategic impact on the entire supply chain, cost structure and customers buying patterns.  It’s having a battle plan A, B, C, and D.

This budget scenario exercise is an ongoing process that involves risk assessment, prediction of economic consequences to potential or real events, and should involve the entire management team.  Depending on the actual environment and conditions this assessment might take place several times a year.

The identification of risk areas that will have significant effect on revenue or costs,  and the  acceptance that things will continue to change, will enable your organization to thrive and survive during turbulent times.

Links

How to do Scenario Planning

Scenario Planning

The Secret of Successful Scenario Planning

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Stop telling me how free it is

6 01 2010

I don’t trust anyone or anything that tells me that something is ” free”.

Experience has also taught me that anyone actively promoting how “free” something is has a very special and usually monetary goal…to get me to buy something later.

If it is free, if you are giving it away with “no strings attached”, why are you promoting it and telling me?

If you are such a wonderful samaritan and altruistic person or organization, then why insist that I understand it is free?

Giving something away?  Just put it out there, let me pick it up, use it, read it, learn from it, watch it, or whatever…and then let me walk away without chasing after me trying to sign me up or charge me for something else, or looking for me to pat you on the back.

Part of the delight of finding something “free” is that it not overly promoted as being free, it’s a surprise, a delight.

If you are going to give something away, just do it, don’t make a spectacle out of your “good will” and “good intentions”….let others do that for you.





What signals are you sending?

5 01 2010

If you received NO economic benefit from your job.  Would you continue to do it?

If you answered “no”, think about what message and attitude you are sending to your clients, co-workers and business network.

If you answered “yes”, think about how this makes you different and unique to your customers, clients, contacts and relationships.





Who’s to blame?

4 01 2010

Don’t blame the world.

Don’t blame the boss.

Don’t blame your co workers.

Don’t blame the customer.

It’s all about our ability or inability to convince them.

It’s all about sales.

Our ability to “sell” the proposal, to “sell” our achievements, to “sell” our value,  to “sell our enthusiasm”, to “sell” our ideas.

If we find ourselves blaming others, it is time to change your plan, change your arguments, attitudes or presentation.

It’s our responsibility, not theirs.

Find a way to convince your audience, co workers, boss or clients, to make them enthusiastic or to understand.

If the customer wants red, and you want to sell blue, find the way to convince them that blue really IS better.

Or find those customers who want and need blue.

Or change what you are doing and sell red.

It’s not about the others inability to understand.

Stop making it their fault.

It’s all about our ability to provide the information, arguments and ideas that allow them to understand.

Stop pointing fingers and assigning blame.

It’s all about us.





It will never work

15 02 2009

When trying to change behaviors, habits, routines or goals in a company on of the first difficulties faced is the opposition from co-workers, employees and team members.

“It won’t work”.

“Completely wrong”.

“They don’t understand the problem, this is crazy”.

Ï’m not going to waste my time on this, it’s stupid”.

They might be right.  It might be stupid, crazy, it won’t work…but it is never a waste of time.

Change, applying new and disruptive methods to operations and problem solving, is always a gamble, and always generates resistance, and many times will not solve the problem.

People say they want change, but only change that has no cost or discomfort associated with it.

Changes will always..always.. always…stimulate new ideas, and get people talking, and more importantly thinking about the problem, the solutions or the process.

This new dialogue, about what is the real problem, about what is a better solution, is what we are after.

Creating and implementing new ideas, creating chaos in some cases, forces people to move out of a “comfort” zone.

Don’t be afraid to hear “it won’t work”, that may be exactly what the team needs to respond.

Your reply should be “OK, what is a better solution?”  Do not focus on defending the idea, get the conversation going how best to solve the problem, or define the problem.





Start the year – forgiveness

23 12 2008

You have the opportunity to forgive others this holiday season

Give yourself permission to forget the past

Give yourself the chance to start over

Throw out the grudges and anger held inside

Forgiveness is not for others, it is for you

It is an internal process of acceptance and renewal, you need to forgive in order to grow

Give yourself the chance to start over this new year, wipe the slate clean

Living for the future is much more interesting than being chained to the past





Happy New Year 2009

23 12 2008

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My very best

wishes for a new year

filled with health,

prosperity and

happiness


Great success with your challenges and new projects

How can I help?