We are going to take the next few weeks to discuss business plans. Most companies at this time of the year are putting final numbers to their plans for next year. We’ll take this time to review some of the important aspects of making business plans.
One of the major responsibilities for a manager is to determine the business climate for the coming year and how it will impact the company’s sales. The basics of a working business plan are a projection of sales. This information is gleaned from your district sales offices and key customers. But, as a manager, you must temper these details against the background business climate. For the coming year, that is going to be a challenge.
We are being told by various economists that the recent decrease in the rate of descent of the various economic metrics is a sign that the worst is over and that the economy should begin to grow again by the fourth quarter. The stock market seems to be reflecting this growing optimism.
But the real underlying events don’t give me much enthusiasm for a brisk recovery. Tax revenues for this year have dropped the largest amount since the 1930s – almost 20% over last year. This is on top of a record multi-trillion dollar deficit already in place from government spending coupled with a war in Afghanistan that is scaling up dramatically. Then you have the Bush tax cuts that are going to expire in 2010. Does anyone believe they will be extended? What impact do you suppose the biggest tax hike in history will have on the economy when the cuts expire? Consumer spending, already at a low point, will likely not recover much with a tax increase.
Right now we are in a deflationary period, but with the dollar dropping to all-time lows against other currencies, the cost of commodities priced in dollars (oil in particular) is going to rise dramatically. Inflation is looming ahead.
How are these events going to impact your sales for next year? Unless you have a particular target market in sight that will mitigate these events, sales projections for next year aren’t likely to grow over this year. As managers, though, one of your key jobs is to find those opportunities and move into them as quickly as you can. Putting a detailed plan in place to take care of the management of your core business activities will free your time to exploit these new opportunities.