While some experts, news outlets and business bloggers claim that five-year planning isn’t worth the paper it’s printed on — especially those plans created before or during the recession — truly flexible planning can withstand even the most drastic of economic shifts and improve your business performance.
CFO.com, for one example, recently shared an article about strategic and contingency planning and how the recession impacted those decisions.
“The financial crisis and subsequent recession turned these efforts on their head, rendering almost every five-year plan into worthless scraps of paper,” according to the article.
While this opinion is apparently common, and may be true, it uncovers a need for both long-term planning and flexible adaptation.
Organizations clearly project for a reason. The reality is that, major worldly events, economic changes and other news worthy events happen all the time. It may not change your business overnight, but you can be sure change will happen over time.
The key for organizations is to have the ability to adapt and be flexible. That’s where rolling forecasts can help. If you’re constantly updating your data points as you’re receiving information and things shift, you’ll be able to make changes much quicker.
In addition, looking at historical data on what happened the last time the economic cycle shifted is helping companies stay nimble. Certainly, technology plays a key role in supporting all of this. Business intelligence and data analytics tools make it possible to spot trends, allowing organizations to make decisions quicker and with more accuracy. You should invest now in tools that give you access to real-time data so you can be flexible in the short-term.
At the end of the day, ditching the strategic five-year plan isn’t wise. Instead, as some experts in the CFO.com article suggest, it’s best to improve your business performance by being flexible and writing these plans “not in ink, but in pencil” and to “keep an eraser handy.”
By Matthew France, from:Â http://www.gcecloud.com/blog/business-performance-and-process-improvement-blog/how-flexible-financial-planning-can-improve-your-business-performance?utm_campaign=2013-10-08_newsletter&utm_source=email&utm_source=GCE+Master+List&utm_campaign=cec68b2a27-2013-10-08_Email_Newsletter&utm_medium=email&utm_term=0_305493c0cf-cec68b2a27-87841281
November 21, 2013 at 11:35 am
Being able to roll with the punches is critical to long term success! You can’t plan for every outcome but if you can spot a trend (for better or worse) before it comes crashing down around you it’s easier to position your company to come out on the other side in a better place (or at least no worse for the wear). Historical data can be used to help predict what’s coming and give you a way to plan accordingly.