What type of Budget Planning makes sense in Phase A, Recovery?
- Do you have enough cash to climb the hill? When in Phases C and D, you should be conserving cash and in Phase D cutting costs to save on cash. Preparing one business cycle ahead will give you the needed cash on hand to manage the climb in Phase A, Recovery, and fuel growth in Phase B, Accelerating Growth
- Ensure you are on good terms with a banker for ready access to cash
- Plan to invest in customer market research; know what they value so you can market/price accordingly
- Plan to hire key people
- Plan to invest in system/process efficiencies
- You can also use this time to make opportunistic capital and business acquisitions, using pessimism to your advantage, if you have been preparing for this phase in advance
What type of Budget Planning makes sense in Phase B, Accelerating Growth?
- You will want to invest in workforce development; items such as hiring, training, and retention programs should be in your budget
- Plan to invest in corporate governance; items such as renting a CFO or establishing a board of advisors should be in your budget
- Include in your budget the ability to implement a program to query your customers to identify what they want and what is important to them
What type of Budget Planning makes sense in Phase C, Slowing Growth?
- Carefully review your capital expenditure plans. This is not the time to be remodeling the lobby or adding in that “shiny new” item. It is the time to conserve cash and be sure your investment will provide the ROI to beat the cycle or, at the very least, help you minimize your slowing growth rate
- Don’t commit yourself to long-term expenses at the top of the price cycle
- It’s time to go entrepreneurial and look for new markets or products that can help you go counter-cyclical
- Start researching other vendors to ensure you have a supply chain in place
What type of Budget Planning makes sense in Phase D, Recession?
- Budget cuts, budget cuts, budget cuts – it’s time to take aggressive cost-cutting measures to conserve cash so you have enough to capitalize on Phase A, Recovery
- Plan to renegotiate long-term leases
- While not budget specific – it’s important to remember to lead with optimism, have a plan, and communicate the plan to reduce fear and turnover within your organization. Creating fear and therefore turnover may result in higher expenses than originally planned for