Plan for the Worst in 2009 and the Best May Happen
Four innovative techniques show you how.
January 26, 2009
In these very strange and challenging times all companies are struggling with budgeting for 2009. With so many unknowns, unprecedented macro-economic reactions to government activity and a high level of fear pervading market dynamics — it is very easy to put your head in the sand and budget along historical patterns. There is a high degree of risk in this approach, however, and companies that do so may inadvertently extend the duration of maximum uncertainty. Instead, consider a completely new approach to planning for 2009 — one that carries with it the potential to shorten the period of uncertainty, reward real performance and settle the collective psyche of your organization.
Four Innovative Solutions
Here’s an innovative technique that includes four approaches that work together to redefine the process.
Cause and Effect
Using these four techniques guarantees a maximum potential for surprisingly GOOD results. Imagine for example that the budget submitted to the bank exempts you from any concern about access to funds. Additionally, you plan your operating budget conservatively using known factors and adjust it as needed throughout the year to reflect new reports. In addition, suppose you succeed in hitting your numbers (or beating them) by the end of next year. Assume also that your competitor’s have not been as savvy in planning and have either miscalculated key items or led the street to expect different results.
Result? Nothing but net! The management team enters the year feeling secure that the budget has a reasonable chance of being attained. As the year progresses — and each new piece of information is reflected — your management team gains a sense of empowerment and confidence to fuel their continued efforts. They can track their quarterly performance easily against competitors and can anticipate what incentive payouts are achievable. Confidence is re-built, reward payments are on the horizon and the sense of danger — so palpable right now — recedes as the year draws to a close. There is a strong sense of accomplishment and pride. Nothing can be better than this as a goal for corporate culture at the end of next year!
So, as you plan, think about this innovative approach to reduce uncertainty. Create a sense of empowerment, connect pay-to-clear performance and provide the psychological boost necessary to facilitate recovery. It can make the difference between success in 2009 and a host of less attractive outcomes.
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Cindie Jamison,CPA, is National Director of CFO Services for Tatum, the only national executive services firm focused exclusively on supporting the Office of the CFO. Her 25 year career includes serving as CFO for 7 companies, both public and private. She has served on the Board of Directors of multiple companies and currently acts as Chairman of the Audit Committee for two publicly traded organizations. Jamison’s unique perspective as a veteran CFO who provides leadership to more than 500 Tatum CFO Partners has made her a nationally regarded expert on the role of the CFO who has been featured in such publications as Fortune, CFO magazine, the Wall Street Journal and Newsweek.