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The importance of business planning

It is easy to get carried away in the current “feel good” economic climate, after all most of the media have been quite positive with their headlines.

Even I was highlighting all the positive news especially through my Tweets last year. One of the positive forward looking key performance indicators I was watching at that time was the Baltic Dry Index.

This is an index of freight sent by sea. Last year in went over the 2,000 level, having risen by well over a 1,000 points in about nine months. This heralded the most welcome economic recovery of 2014. However, by last week this index had sunk to 780 meaning that there is excess capacity in the shipping market and therefore hugely less freight being shipped around the world.

Now there are also other economic and political factors helping to point the “good news” indicator needle in the opposite direction.

The UK housing market is showing signs of weakening given the over zealous box ticking risk averse approach to new mortgage applications and the distinct probability of increased interest rates before too long.

The Euro Zone continues to flounder with a banking crisis in Portugal just narrowly averted and both France and Italy back in recession (paradoxically Greece is now recovering quite well). Our own FTSE index has dropped by over 300 points in a matter of a few weeks.

On the political front there are unpredictable tensions in the Middle East and around the Black Sea; the world generally feels a less safe place.

Our own general election next May means that our politicians will fudge any corrective action that may be required because their sole selfish aim is to gain power by any means available – even if that means being a lame duck.

Therefore, given the current climate I have summarised above, I feel that the coming 12 months will be nowhere near as lively on the economic growth front as we have been experiencing for the last two years. The leading indicators are mostly pointing downwards.

This therefore is a time to think about the coming possible slowdown (please note: not a recession) as an opportunity to examine your business strategy and adjust your business planning appropriately.

Give some thought to the services/products that you offer and the activities and resources that are needed to deliver these. Have you defined or recently re-visited your customer value proposition – is it up to date and relevant? Are you focussing on the right customer/client profiles that are likely to help you move your business forward rather than merely tread water? Have you identified the factors necessary for your business to achieve sustainable growth?

These are all the areas that we helped our clients with when things turned nasty after 2008 and as a result our top 40% of clients produced amazing growth results in a prolonged recession.

They continue to think about and amend their plans and their strategies, thereby continuing to keep ahead of the game.

Please don’t let the current “feel good” factor lull you into a false sense of security. Be prepared.

Peter Cox
August 2014

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Posted in: Blog, Business Planning