Action planning for a strong financial year

The theme for our previous post was building certainty and confidence for the financial year ahead with a robust Budget. We introduced the Budget cycle and walked through the steps involved in building your first cut. Here we move on to Part Two: Building your Action Plan.

Sanity check

Once you have completed the first cut of your Budget, the next step is to circle back to your Total Costs for a sanity check. Is your proposed cost structure strong enough to deliver your Required Revenue figure?

As yourself questions like:

  • Do we have the team we need to achieve this level of revenue? Staff, contractors, external experts, advisors…
  • Do we have the operational capacity to deliver this level of revenue? Premises, machinery, vehicles…
  • Is our market big enough to achieve this level of revenue? Do we have the required brand awareness and reputation to secure our market share?
  • Do we have the marketing set up and advertising budget required to deliver this volume of sales?

Cycle your way through the five components of the Budget cycle, tweaking and adjusting your estimates and targets until they are all realistic and in alignment.

Rather than simply pulling numbers out of the air, these tweaks and adjustments need to be backed by tangible actions and improvements. This is where your Action Plan comes in – a prioritised list of the tactics that will make your targets reality.

Building your Action Plan

There are a myriad of tactics that you can employ to realise your Budget targets. Broadly-speaking, these tactics fall into three high-level categories: Increasing Revenue. Increasing Profitability, and Decreasing Costs. Here are some examples to kick-start your thinking.

Increasing Revenue

  • Make sure that the current clients are happy with how they’re being served. If not, there’ll be no point getting new ones – you’ll just end up losing them! Make customer surveys happen so you can see if anything needs changing or improving on your end, before it becomes an even bigger problem.
  • Look for ways to increase the value you bring to your clients. This will help you shorten your sales cycle, lengthen your client retention, and perhaps, increase your pricing.
  • Look for ways to bundle products and/ or services so that you increase the average value of each order.
  • Sell your product or service in larger purchase sizes. This could mean that rather than selling a 10-hour package of time you sell in 20 or 50 hour packages. Think about this as selling a bigger box of your product or service.
  • Make buying from you easy and simple. Reduce barriers to entry. Reduce frustrations or hurdles to repurchase.
  • Increase prices to reflect the superior service your offer and/ or to match inflationary increases (no higher than the market will bear). You don’t have to meet the desired price point of all your clients. For example, you may increase prices by 20% and lose 5% of your clients. This is still a net increase for you.

Increasing Profitability

  • Prioritise time and effort on decreasing your COGs (Costs of Goods Sold). This generally has the biggest impact on your bottom line.
  • Work smarter not harder. Focus your best efforts, people and attention on selling your most profitable products and services to your most profitable customers.
  • Inspire your team. Set KPIs and give them a clear picture on ways they can contribute to the business’ bottom line. Empower them to be part of the search for ways to increase profitability.
  • Review your organisational structure. What will work best for your new plan? The team structure that got you here might not work best moving forwards.
  • Redesign workflows and systems for greater efficiency. Cut steps, reorder processes, re-engineer physical workspaces.

Decreasing Costs

  • Eliminate tasks and activities that don’t add value to your company or your clients. Every dollar you save here drops directly to your bottom line.
  • Negotiate competitive pricing from your suppliers. Recent supply chain issues have forced many businesses to relook at their suppliers. The silver lining for some of our clients in this situation has been substantial savings from doing so.
  • Shift a cost from a fixed to a variable expense to give yourself greater flexibility and protect cash flow. (Extremely important for unproven tactics.) For example, pay an external sales person a per-sale commission, rather than a guaranteed amount per month.
  • Consistently look for ways to lower your fixed overhead. Scrutinise your base costs and eliminate non-strategic expenses that just don’t add value to your company or your clients.

Your Action Plan can be as simple as a one-pager outlining each action, the person responsible, when it’s going to happen, and the first step to get things moving.

Be sure to book non-negotiable time in your diary throughout the year to hold yourself accountable to your actions. Or better yet, have someone else hold you accountable. There’s no use waiting for year-end to see if you’ve hit your targets – best to assess regularly and change strategy quickly if required.

Finally, remember that your Budget is not set in stone. As your situation changes, you can adjust the figures in your Budget cycle and see what it means for your Net Profit.

ACTION: Book two 90-minute sessions into your diary now – one next week and one the week after.
Dedicate this time to sanity-checking your Budget and building your Action Plan. Also book in your Budget Review sessions at the beginning of each quarter.

Stuck? We're here to help.

Having trouble applying this process to your business?

A quick chat is often all it takes to get past a roadblock. Book a FREE 15 minute Check In call with Darrin or Paul at a time that suits you, and let’s get your budgeting back on track.

It’s great to see businesses large and small booking chats with these fine fellas. We encourage you to do the same – you don’t have to be a Greenhawk client! Here’s to a confident start to FY23 for all.