How To Plan Ahead for Another “Normal” Year

Take a second to imagine you’re a high school football coach. It’s a mid-season game, but for some reason, your typically-above-average team is getting blown out. It’s just not clicking. Fumbles. Missed tackles. Mental errors. Nothing seems to be going right.?

As you enter the fourth quarter, you already know you’re going to lose. Even though you consistently tell your players to “always give 110%” and “never say never,” you know they don’t have a chance. The season isn’t lost, but this game is over.?

You have two options.?

You can run out the clock as quickly as possible so you can forget about the whole thing and move on. There’s always next week, right?

Or, you can finish strong and use the fourth quarter as a chance to improve and prepare for next week’s big game against your rival. The second option is harder, but we all know it’s what a good coach would do.?

In much the same way, there’s a high likelihood your company feels like you’re getting blown out in the final quarter of 2021. You’re entirely too busy. Your team is up to their eyeballs, and the overall feelings of panic and stress are palpable.?

As the leader of your business, you have a choice. You can hold your breath for the remaining months and hope for a fresh start in 2022, or you can use those months to finish strong and glean the valuable lessons you need to make next year a success.?

In this post, we’re going to talk about the process for learning the important (but not-so-obvious) lessons from the past year and how to use them to inform your strategy for 2022.?

Why Calling the Past Two Years “Abnormal” Is a Mistake

Over the last several months, you’ve probably noticed the immense number of articles being published online about?“lessons learned from the pandemic.”?

Thought leaders across all industries have (thankfully) moved on from posting about the “return to normal” and are now chiming in with their insights and advice for future-proofing your business in light of the last two years.?

While the pandemic taught us some very valuable lessons worth paying attention to, focusing too much on the upheavals of 2020 and the rebound of 2021 can overshadow a critical truth: we’re always in a perpetual state of change.?

This is why the topic of “returning to normal” has always irked me. (And that’s putting it mildly.)

Everything is changing, always. That’s the only true “normal” we’ve ever known.?

We’re now approaching the final quarter of 2021, and while our level of fear is far less than it was 12 months ago, the feeling of uncertainty is just as prevalent.

Again…that’s completely normal. To move forward into 2022 in the best position possible, it’s imperative to embrace this viewpoint.?

Strictly speaking in business terms, saying the past two years were “abnormal” isn’t accurate. They were eventful. They were scary. They were disruptive, unpredictable, and costly. Yes, it was a crisis. But then again, so was Brexit in 2016, the government bailouts in 2008, the housing collapse of 2007, and 9/11 in 2001. And that’s just in the last 20 years.

Change and disruption are a normal rhythm, and while the pandemic was a more impactful crisis than many others in the past, the market’s reaction was as normal as anyone could expect.?

By calling these past two years “abnormal,” what we’re really doing is giving ourselves permission not to learn from it. They’re seen as statistical outliers. And boy, how we love throwing away data from outliers!

To be effective in leadership and strategic planning, we can’t use the excuse of statistical anomalies to make ourselves feel better. We need to throw the concept of normal versus abnormal out the window.?

The bottom line is, your business depends on your customers. And your customers will only turn to you if you provide the value they’re seeking and meet their needs.

That was true in every crisis before the pandemic, in the “normal” years leading up to the pandemic, in the “abnormal” years of the pandemic (however long it lasts), and it will be true for all the years to come.?

How To Extract the Most Valuable Lessons for Year-End Planning

If we can accept that the normal-abnormal classification is unhelpful, then the question shifts from, “How do I approach strategic planning for the upcoming year?while in a crisis?” to simply, “How do I approach strategic planning for the upcoming year?”?

To start, we need to extract the lessons the previous year taught us by looking at three major areas. While this is a process, keep in mind that all three steps are equally important.?

Step #1 — Study Cash Flow

The first step is to get a clear picture of your cash flow. This is especially important in a crisis, where cash flow is everything.?

No owner enjoys asking, “Can I honestly generate enough money to keep the doors open?” And over the last two years, we’ve all had to ask that question a lot.?

Business survival, which has been top of mind for most owners, depends on generating enough cash to pay employees and overhead without overstressing credit sources. When you study your cash flow, you can find out exactly where you struggled and learn how to avoid it in the future.?

What you’ll find is that the answer isn’t always as obvious as, “I just need more business.” Sometimes what you actually need to help your cash flow is to get paid differently. Find the opportunities and take note.?

Step #2 — Evaluate Profit (With and Without Subsidies)

The next step is to look at your profit. This is where many owners may say, “We broke even in 2020, and it’s looking like we’ll be in the black in 2021.”

It looks great on the surface, but it paints an incomplete picture if all factors aren’t considered. When extracting lessons to inform decisions about the next year, we need to know the whole story. That’s why we need to look at our profit both with and without government subsidies.?

Subsidies won’t be around forever, so when we take them out of the equation, we get a better understanding of where we really are. When we inspect profit without that element, we can see the exact things we’ve neglected to address or fix because we were comfortable with our perceived cash flow at the time.??

Step #3 — Analyze Customer Requests

Since the beginning of the pandemic, our customers have been surprising us with their ask. Some requests horrified us. Other requests delighted us. And sometimes, we even learned that the requests we originally saw as horrible ended up being delightful.?

The third step is to analyze these surprising requests. We need to bring them to an open conversation with fresh eyes and look for the opportunities we may have missed in the chaos.?

Integrate the Lessons Learned Into Your Strategic Plan

Extracting the lessons is the critical first step, but the information is useless unless it informs action. Now that we have our data, we need to put it to work in our strategic plan. Here’s how:?

1. Anticipate and Meet Needs

Once we’ve analyzed surprising customer requests, we can get ahead of their needs. This starts with looking at past patterns so we can anticipate what comes next. But it also involves?telling?customers what they really need. And, more importantly, telling them why they need it.?

Since you’ve analyzed their requests, you are the expert in what your customers?should?have asked you. Find ways to?incorporate the needs and wants they should be asking for?into your business plan for the upcoming year.??

2. Attach Value to Their Needs

Next, we need to fundamentally change our relationship with money — specifically, our understanding of how we make money in 2022.

This starts by understanding your customers’ needs and wants. Identify their needs and wants and?attach value to them?so you can sell them at a profit.??

That seems obvious, but the things?we?find valuable or important don’t always turn into gross profit. And they don’t always align with what our customers find valuable or important. Everything comes back to?their?wants and needs — not ours.?

The classic example of this for AV companies is flip charts. Once upon a time, flip charts were the most profitable products in the industry. Was it sexy? Absolutely not, but the demand and profit margins were unmatched. The companies that understood that value shaped their entire operation around it. All other deliverables existed to support the flip chart rentals, and they were wildly successful for it.?

Once we know what customers find valuable — and therefore what generates profit — we can duplicate this in multiple jobs, which helps us make better use of our internal assets.?

3. Control Utilization

Finally, we need to control the utilization of our supply chain. That starts by understanding what your supply chain actually is.?

Your supply chain is not just the number of the assets and equipment in your warehouses and employees under your management. It’s more than that.?Your supply chain is the entire industry.?

Before the pandemic, most companies focused on owning every element of the supply chain. This created an overabundance of equipment, technicians, and resources. But now, we don’t have to?own?every element of the supply chain to control it.?

When we bring it back to our customers’ needs and wants, we can see why this matters. Your customers don’t care how much inventory you have in your warehouse or how many technicians you have waiting in the wings. They care about whether or not you can solve their problem.?

By shifting our focus to fulfilling customer needs instead of bolstering our internal resources, we can be more flexible and maximize the utilization of the resources we have. If demand is low, we can then reduce supply. If demand is high, we increase supply. The point is, it’s within our control and we can decide the amount of demand we?want?to service, as opposed to the amount of demand we?have?to service.?

Finish Strong

No one has a crystal ball telling them how next year will unfold. But I can promise you, it will be just as “normal” as every other year. Things will continue to change, and the market will continue to react.?

While there’s nothing you can do about the outside conditions, you can control your response. Studying cash flow, evaluating your profit, and analyzing your customers’ needs is the best place to start in any year. Then turn it into a plan —?a plan that you’ll surely change next year to meet ever-changing client needs and wants.