Our regular followers will know that we generally advise business owners to revisit and revise their plans and forecasts over the quiet Christmas period and to give some thought to setting goals for the coming year.
In the aftermath of the events of 2016 many will have found it harder than usual to see the way ahead given the uncertainties surrounding the economy both at home and in the wider world.
Predicting the future means understanding where you are and knowing what resources you have
Reviewing a business’ performance over the previous year is undoubtedly a worthwhile exercise for establishing its current position, including identifying any weaknesses in your financial position as well as those systems that should be improved.
A business that has existed for some years will have experience of a variety of trading conditions and how they were overcome to use as the basis for analysis.
It is also likely to have an established network of suppliers and clients/ customers for gathering information about options including sources of finance. Depending on the goods or services it supplies it will at least understand the competition it faces and be aware of the demand and future trends.
The relatively new SME will not have quite the same level of experience and information, although hopefully it will at least have carried out research into demand, likely customers and how to market to them, as well as having identified the level of investment needed.
Whether new or more established, both can use the techniques of a SWOT Analysis to identify their Strengths, Weaknesses, Opportunities and potential Threats to clarify their current position in an organised way and identify the So WHAT actions that arise from a SWOT Analysis.
Please refer to the K2 Knowledge Bank for more on SWOT Analysis and how to get the most out of them: knowledgebank.k2-partners.com.
This preparation work will help with setting the following year’s goals.
The unanswerable questions and being prepared
The major problem facing all businesses at the start of 2017 is, of course, the economic uncertainty surrounding the possible actions of a new US President and the lengthy process of negotiating the UK’s exist from the EU.
Goals will need to be set that make allowances for best and worst cases, regardless of whether a business is local or an exporter.
Absolute knowledge and control of cash flow, sales, invoicing and comparing monthly management accounts with the forecast as a regular review is likely to become imperative.
If possible, ensure there are at least some financial reserves to deal with the unexpected.
While it is plainly foolish, even if it were possible, to forecast the future in any detail, especially now, there will undoubtedly be unexpected opportunities as well as shocks.
Businesses will need to cultivate agile and flexible cultures, systems and processes to be prepared for both the opportunities and potential hazards of surviving and flourishing in the current economic climate. Courage and nerves of steel would probably help also.