2021 Planning, Projections and Budgeting, Power Idea by Deb Mazzaferro

2021 Planning, Projections and Budgeting

“If you fail to plan, you plan to fail” is a stalwart adage.

“Numbers are the language of business” is another favorite.

In 2020, there have been extreme winners and extreme losers.

Some people have gained time that used to be spent commuting; others are struggling because they lost their jobs.

Grocers and online sales are way up, while hospitality, travel and restaurants have seen their revenues decline and profits disappear.

There looks to be a vaccine soon, but when will we reach herd immunity? Even then, people will be slow to return to travel by air and to attend large gatherings like concerts, sporting events and festivals.

So how does a business team reconcile these discrepancies and do their 2021 planning?

A rigorous budgeting process includes: prior year’s performance, unbiased evaluation of trends, use of outside data, and creative brainstorming by an experienced team. Let’s look at each of these individually.

Prior year’s performance: what’s happened in the past 3 – 5 years has typically been a strong indication of the future. However, 2020 was off the rails for most businesses starting in early March. Either you saw a spike, or sales dropped precipitously. Even if you saw a spike, were you able to keep up with demand, or did you short ship some of your deliverables because of supply-side issues? Have you resolved those shortages? Are you bringing more capacity online in the near future? Do you need to ensure that additional capacity is used? If sales dropped, did you furlough or fire personnel? Will you have enough bench strength to build back what’s been lost?

Unbiased evaluation of trends: we tend to see what we want to see in trends. For example, while there is phenomenal growth in plant-based foods, they still only represent a small portion of the overall American diet. Rather than introducing new vegan foods, perhaps your products complement a plant-based diet?

Use outsourced data to supplement your hunches about trends. Be sure to continue to play to your strengths rather than go off on tangents. However, experiment with new positioning to test new markets. Remember that these efforts need to be supported with promotions and marketing. You can’t just wish them to happen. Budget for them and evaluate your return on investment monthly to ensure the best outcome.

Creative brainstorming by an experienced team: nothing replaces critical thinking by a team who are open and receptive to hearing each other and finding consensus. Each discipline brings different perspectives: sales, marketing, production, finance, and admin managers should be encouraged to make contributions and to understand each other’s concerns. This is probably the hardest step and is best facilitated by a skilled outsider who can manage the meeting dynamics and ensure a safe place for all voices to be thoroughly heard.

Once the process is complete, write your plan. If done as outlined, all stakeholders should be on board and eager to bring home the results.

This Power Idea is brought to you by Deb Mazzaferro, Senior Alliance Partner of HPISolutions. 



2 Comments

  • Well said! I would add 2 pts. As I am sitting here working out my yearly calendar and goals for 2021, this came to mind. The time to plan is before so you shape your actions now to support your moving into your goal momentum of next year. We’ve had plenty of time to bemoan 2020 with its absolute hardships and heartbreak. If you are in a position to see forward, excepting that grief derails us awhile, then plan ahead. Help organize today’s thoughts to make tomorrow happen.

  • Terry, you are so right. Time to move on to a better, brighter future, having learned lessons from the past. Deb Mazzaferro does a superb job in my view to identify where you are at and the cold hard facts of actions you need to take to move forward in this new world, shaped in part, by COVID. thanks for sharing.

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