Are your marketers prepared for the unexpected?
The whole purpose of business and marketing plans is to prepare for the expected and intended, but equally for the unexpected event or conditions whether good or bad.
The ability to identify indicators of change in the economic situation, the market, specific customers and technology will become increasingly important, if a business is to remain adaptable to a changing environment. Being adaptable will be essential for the long term survivability of many businesses in a rapidly changing world.
Commercial managers are responsible for producing sustainable profitable income for the long term. To do this effectively, requires both new ideas, experience of the market and an understanding of the business’s previous business getting and retaining activities. It also requires an awareness of a changing environment that may result in threats or opportunities for the business.
For many commercial managers and business planners, the preparation of business and marketing plans is such a protracted affair, that the idea of preparing contingency plans hardly comes into it. Yet the “what if “question, is vital if plans are not to be thrown into disarray when events turn out differently from that which was expected. It is incumbent upon commercial managers to identify potential problems in the market and the economy and to prepare accordingly. How should they do this?
The various quality economic surveys are a prime source of information, as are Government reports, the Bank of England, and economic forecasts from the principle financial institutions and banks. Collectively these can provide good indicators of the economic climate and its future. In addition, statistical information regarding trends and activity in the relevant market sectors is important, as this sets out the forecast of the prevailing trading conditions in the immediate future.
If the preparation of a business or marketing plan is completed properly, the process will require an analysis of the strengths, weaknesses opportunities and threats (SWOT) that affect the business. Strengths and weaknesses are confined to that of the organization in relation to its overall performance in the market and against the competition. Opportunities and threats cover those external factors which affect the business e.g., health and safety, economics, legal aspects, as well as those that are seen directly effecting marketing such as competitor activity and market trends.
Additionally, opportunities and threats relate to political, economic, social and technological factors that can affect the business; assessing the nature of these factors is generally carried out through a PEST Analysis. PEST (Political, Economic, Social and Technological) is used to describe the framework of analysis of the external macro-environment in which the firm operates and to assess the potential risks to the business or marketing plans. A PEST analysis should enable a Commercial managers to then have an understanding of the external risks to their plan, and consider the “What ifs”.
- What if the principle contract of this year’s revenue does not come in on time, – how will it affect cash flow?
- What if you fail to win the principle contract? Can you make up the revenue? If so –how?
- What if the economic slowdown reduces demand? How will the hole in the revenue plan be filled? What actions will have to be taken and by whom?
- When do you have to confirm contract success or failure in order to make good the revenue plan?
Business and marketing plans are essential working tools for effective management, to ensure that assets and resources are used effectively to achieve the objective and should not be seen as a tedious annual event. Used properly, the business and marketing plans should be in continuous use as a working management tool, being regularly reviewed and revised to meet changing conditions, so that resources can be moved effectively when the unexpected happens. Ensuring that income is profitable requires the constant monitoring of costs. It is therefore advisable to have a regular review of costs which have a habit of inflation over time, and to cut them as and when necessary.
While it is important to have contingency plans for the more predictable events, it is worth considering the potential impact and their consequences of some of the less likely and unpredictable events that could occur. How might the business react to a major fire, a serious IT failure or security breach, or perhaps an unexpected failure of major supplier or customer? While it may be considered impractical to have detailed plans for such potential and perhaps hypothetical events, it is worth establishing some principles regarding how such events might be dealt with.
If businesses fail to make effective contingency plans to deal with changing economic and market situations, then commercial managers must take a major part of the responsibility, as theirs is the task of maximizing sustainable profitable revenue.