Manufacturing firms normally create a business plan at year end that focuses on the upcoming year. However, today's market conditions are anything but "normal."
So, it's important to take the time this summer to revisit your company's plan. A comprehensive mid-year review can help determine whether your business is on track or your plan needs some adjustments.
Here are four pillars that will help create a solid foundation for your business plan.
Adjust for the Present
Your firm must consider its current situation to develop a plan for the rest of the year. This requires a thorough analysis of the marketplace to identify potential risks and opportunities. Obviously, you want to minimize the former and maximize the latter.
Start with the quantitative results from the first half of the year. Evaluating budget-to-actual figures can help determine whether you need to adjust your sales expectations, scheduling and rollouts. Performance that differs from the projections you made in December or January may require changes to better accommodate customer needs and tackle operational challenges.
Next comes a realistic qualitative assessment of your situation. Many manufacturers are currently reporting labor shortages, increasing costs and delayed deliveries. And there's mounting concern about increased government regulations, inflation, interest rate hikes and less favorable tax law changes in the second half of the year. Your management team should brainstorm ways to address and hedge against these trends.
READ MORE: Why Manufacturers Are Looking Forward to Growth
Evaluate Potential Opportunities
The second step requires you to predict future growth and profit opportunities based on market trends and the industry outlook. Your management team should brainstorm innovative ideas to grow the business and operate more efficiently. Examples include:
- Discussing expansion and creation of products that are easy to sell online,
- Conducting virtual meetings with clients, suppliers and vendors,
- Implementing ways to speed up the supply chain and increase cost efficiency,
- Finding innovative ways to attract new customers, and
- Responding to customer and employee input gathered during the pandemic.
Based on lessons learned from the pandemic, you might decide to continue remote working arrangements, whenever possible, to promote job satisfaction and productivity. In addition, the costs associated with employees who telecommute and use virtual meetings are typically much lower than expenses for those who occupy an office or cubicle. Likewise, you might continue to rely more on virtual meetings (for sales, procurement, business acquisitions, training and professional advice) to help reduce your business travel costs.
Address Contingencies
The pandemic has taught business owners and managers to expect the unexpected — whether it's a resurgence of COVID-19, a natural disaster, civil unrest in your local community or a crippling cyberattack. It's important to incorporate contingencies into your plan while also positioning your firm for success.
In case your operations are disrupted in the future, install backup procedures and protocols in place to protect your business interests. In fact, you might even want to have a secondary backup plan in case your original backup falls short.
In other words, don't simply develop "Plan A" mid-year. Come up with a "Plan B" and even a "Plan C" for worst-case scenarios.
READ MORE: The Top 7 Tax Benefits for Manufacturers in 2021
Adapt Your Plan for New Developments
Last, but not least, the manufacturing sector never stands still. After you've adapted your mid-year plan for the present, future and contingencies, ask your team, "What's new?"
Through interactions with customers, lenders and suppliers, members of your management team might have insight into these new aspects:
- Sales or distribution methods,
- Marketing strategies to attract a novel or changing demographics,
- Credit practices to encourage more-timely payment, and
- Technological innovations that can enhance product quality, streamline production or safeguard data that's stored electronically.
Manufacturing operations need to evolve with the times. Successful firms embrace change. Although business disruptions may bring dark clouds, innovative firms find silver linings that add value over the long run.
Reminder
Ongoing market volatility — including the outlook for taxes, government regulations, pandemic-related safety concerns, the availability of skilled labor, shipping costs, and the prices of supplies and materials — makes planning for the remainder of 2021 particularly challenging.
But creating or reviewing your company's business plan doesn't have to be a do-it-yourself proposition. Obtain expert guidance from your professional advisors. You can rely on their assistance in today's volatile marketplace and beyond.
© 2021
