How do you plan for sales plan and growth in times of uncertainty? How do you do it?

Planning for sales plan and growth in times of uncertainty is ery difficult. The crisis economic, COVID-19 pandemic has changed our world, almost overnight, and businesses must adapt. The unprecedented nature of the pandemic means no one knows how deep the economic downturn will be, or how long it will last, making financial planning for businesses particularly difficult.

Planning for the future in times of uncertainty: five simple and unstoppable steps

Businesses are clearly struggling to plan. A Gartner survey of 99 CFOs and CFOs from April 14-19 found that 42% of CFOs did not factor a second wave of COVID-19 into the financial scenarios they are building for the rest of the year 2020, a result described as “surprising” by Alexander Bant, vice president of research at Gartner Finance. Many SOEs have also withdrawn their guidance due to lack of visibility

So how then can companies plan when the visibility is so cloudy and the unknowns so many?

For Workday’s finance team, it’s about embracing scenario planning — essentially harnessing the power of “what-if” — to respond to COVID-19, as do many of their clients. The planning platform in the fog processes up to 30 times more forecasts and construction scenarios for customers than in a typical week before the pandemic. And given the volatility and unpredictability we have seen, the situation is unlikely to calm down any time soon.

But the reality is that agility starts with planning. Shortly before the pandemic hit, Workday, like many companies, had taken its plan into its own hands and was weighing many potential outcomes, including whether the long-term economic expansion would begin to show signs of slowing.

Faced with the realities of the pandemic, they had intensified scenario planning so that they could adapt to changing market conditions and achieve the level of agility demanded by our business. And, so they had to keep adjusting and adapting like all businesses. Workday then identified five critical steps for successful scenario planning.

First step: assess the potential impact on all levels.

How will what happens impact revenue and the various revenue streams that drive revenue? For many companies, this will include the impact on new business activity, customer retention, and the assumptions that were used to assess the impact of new product launches, if any. Every business faces a different situation. During the pandemic, many businesses in the hospitality industry are struggling. Meanwhile, many online retailers are booming.

The history of each industry can be instructive. During the Dotcom crash of 2002 and the financial crisis of 2008, for example, software companies with a higher percentage of SMB (Small And Midsize Business) customers were hit harder by monthly renewal rates. Since no one has historical pandemic data, it’s important to start with some fairly basic scenario planning.

Model selected revenue elements, such as new sales, repeat business, and upsells to existing customers by quarter throughout the year. Consider a series of possible scenarios for your business, perhaps 50%, 65% and 80% of a pre-pandemic plan. This gives a good idea of what could happen to the income statement and balance sheet and helps companies understand the gaps on the metrics that matter most to them. For organizations like Workday, it’s subscription revenue growth, non-GAAP operating margin, and ultimately cash flow.

Step Two: Identify the levers on the investment side of the business.

What levers should you pull? For most businesses, employees represent the most significant cost. Will you hire as planned before the pandemic? What are the differences between scheduled hiring, hiring freeze for the rest of the year and the range of intermediate options?

No company wants to cut jobs at any time, so it’s important to understand the other cost levers available to you, and the different possible outcomes when you pull them. To understand your big levers, you need to deeply understand your business.

Read also: Essential KPIs, Formulas and Definitions for: Financial Business, Marketing, Sales, Customer Service, Search Engine Advertising, Emailing, or HR Systems

Step Three: Align Leadership.

The finance team should not decide on steps 1 and 2 alone. Involve all leaders to get the right picture and analysis, and make sure you have identified the right levers. The involvement of leaders allows everyone to stay in tune and think about the right things. For many companies, this can take the form of shared management team dashboards or regular review meetings.

Fourth step: identify “THE” good result.

Ask your organization what a good result looks like. This varies from organization to organization:

• Is it to retain existing customers?
• Is it to retain your workforce or to maintain a level of customer satisfaction?
• Is it about growing and gaining market share from distracted competitors?

By identifying what matters most to your organization, you can better prioritize during Steps 1, 2, and 3. And in today’s climate, that desired outcome may change, further reinforcing the importance of an ongoing approach. planning.

Step five: Dive deep.

Once you have your different scenarios, and have received feedback on them, dive deeper. For some companies, this will mean digging deeper into supply chain issues, for others, assessing risk by segment, etc.

Third-party research can help you decide how to respond. For example, if you know that a number of your suppliers or customers are suffering a lot, how can you proactively support them? Align the different teams on this topic as well. For example, sales and customer service hear directly from customers. Their knowledge should inform your analysis and allow you to help your customers, your partners and your own turnover.

Read also: How to Build Customer Loyalty?

From scenario planning to continuous planning.

Even before the pandemic, Workday’s finance organization was working on an ongoing planning framework. Their goal is to move from annual planning and budgeting to ongoing planning through more frequent reviews and assessment of the impact of changing conditions on our product roadmaps, and vice versa. Along the way, they look at things like margins and cash flow. Whenever conditions change, they expect to be able to act and adjust our model. For example, if the development of a product has fallen behind, do you have to adapt by increasing investments to get it back on track or do you have to adjust your revenue estimates? If they work well within continuous planning, the planning is not a point in time – it is continuous.

After the shock: focus on planning and forecasting

Many companies are moving, or will move very soon, to the second phase, in which cost reduction is the main concern. It is based on the approaches introduced during the shock phase. New approaches to planning and forecasting are now needed to deal with the still high level of uncertainty. As noted for the shock phase, the annual, quarterly, or possibly monthly planning and forecasting processes should be changed to a one- to two-week rhythm.

This results in the following recommendations for action:

• • Form a special crisis management team

This team must analyze the effects and consequences of the crisis on the company and ensure that the appropriate measures are quickly taken and implemented. This crisis management team should be made up of managers from all areas (both operational and financial, usually 15 to 30 experts).

Focus on key performance indicators: cash flow and profit. Upstream, time-consuming and decentralized functional planning processes, such as sales planning, need to be replaced by faster processes that focus on effects and metrics.

• • Strengthen management capacity

Through a centralized process that relies more on decentralized know-how to plan the effects (for example, the impact of concrete market changes on one or more lines of the income statement) and to derive concrete measures (eg short-term reduction of infrastructure costs).

Effects and measures offer greater flexibility in times of crisis and mobilize less capacity under strict medium-term planning, resulting in less resilient budgets.

Read also: Success of Your Business Depending on Finance, Sales Marketing and Operations

Embrace flexibility

The pandemic is challenging us, as humans, businesses and business partners, in all sorts of new ways. In a crisis, finance teams need to be able to smoothly handle issues related to uncertainty. Scenario planning – and eventually continuous planning – allows us to embrace flexibility and use it to our advantage.

But the reality is that agility starts with planning. Shortly before the pandemic hit, Workday, like many companies, had taken its plan into its own hands and was weighing many potential outcomes, including whether the long-term economic expansion would begin to show signs of slowing.

Faced with the realities of the pandemic, they had intensified scenario planning so that they could adapt to changing market conditions and achieve the level of agility demanded by our business. And, so they had to keep adjusting and adapting like all businesses. Workday then identified five critical steps for successful scenario planning.

Photo credit: geralt via Pixabay

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