By Lewis Miller, CFO at Tenth Revolution Group

The whole idea behind making a plan is that you can prepare for and endure a range of possible eventualities. But even businesses with the most thorough financial strategies couldn’t have fully prepared for the economic turbulence that industries the world over have experienced in the past year.

The global health crisis presented us with a complex, multifaceted situation that was changing daily, leaving businesses unable to see the next turn in the road. Five-year plans went out of the window. Even six-month plans were drafted in pencil. The road to economic recovery is long and challenging, but now, as we pass through yet more checkpoints on the journey out of lockdown, many businesses are getting a better idea of how it might play out.

Given the obstacles that organisations have had to overcome recently, many will be going back to the drawing board and revisiting their financial strategies to set themselves up for success going forward. Resource levels might have changed, goalposts moved, or overheads adjusted as we shift to new ways of working.

As the CFO of a company that’s been growing and evolving at a relentless pace over the past few years, the benefits of adapting to change and reassessing your financial plan are not lost on me. Here are a few key points to consider if you’re planning to build out a new financial strategy.

Map out your current situation

Businesses had to make changes at a breakneck pace in 2020. From pivoting service offerings, to enabling a remote workforce in the blink of an eye, some of the financial decision-making done in the past 12 months was more akin to bailing out a sinking boat.

Even as the dust begins to settle, very few financial leaders will find themselves back where they were a year ago. So it’s time to take stock of those decisions and work out exactly where your business is right now, rather than where it was or would have been.

Examine existing resources and expenditures to find out where you’re spending your money at the moment. Are any of those ’emergency’ pivots and strategy changes paying off? If you’ve reallocated resources or changed spending priorities, which of these strategic initiatives have affected corporate performance, and are worth keeping long-term? Maybe there was some spend you once considered untouchable that has proved to be more flexible? Reassess your fixed and variable costs and give yourself an accurate, up-to-date starting point on which to build your strategy.

While your primary objective is usually going to be to grow your topline, in situations where that’s not so viable you should have a clear picture of where you can reduce overheads to offset that financial slowdown.

When it comes to being prepared for (almost) anything, knowing what levers you can pull is vital. Aim to have a rolling three-month overview of committed spend across the entire —iIf you know what’s coming up, you can work out the most effective switches to flip to cut or postpone outgoings if you have to.

Carry out an audit of your external circumstances too. Has your position in the market changed? Maybe some of your competitors have dropped off the radar, or you could even have new companies pivoting into your industry. These factors will impact many pillars of your strategy, particularly when it comes to sourcing investment and capital, so be thorough.

Redefine your goals

Once you’ve got a better view of where you stand and your position in your market, consider whether your goals, both short- and long-term, have changed too.

Where does leadership want to take the company, and are there any additional steps or diversions you need to take to get there, especially after the events of the last 12 months? Are you aiming to sell, or do you need to seek additional investment?

When you’ve nailed down your business objectives, break them down into financial goals and work out which actions will provide the most value in the current climate. Look into what strategies are going to best support the business right now, even if these are shorter-term bridge solutions than you would typically utilize. Focus your finance activities on what’s most valuable and divert efforts into these critical areas.

You should be aiming to distill a clear mission and vision for the finance team to align themselves with over the next one, three, and five years.

Create a structured (but flexible) roadmap of objectives

Last month, Bank of England governor Andrew Bailey shared his optimism about the UK’s economic recovery rate. As businesses learned to adapt to changing restrictions, Bailey stated that the impact of lockdown rules on the economy was lessening. However, he also warned that progress might not come in a straight line, thanks to the looming threat of emerging Covid variants.

Clearly, we shouldn’t be planning to revert to our pre-2020 strategies, with flexibility and continuity planning at the core of any new financial plan. New strategies should be broken down into granular steps, even more so than the usual two, three, and five-year plans.

The new goals you outline in your strategy and their associated actions should be modular. If progress is slowed or new obstacles arise, you should be able to adjust these steps, move them around, and change deadlines without having to go back to the drawing board and working from a blank page.

You know what they say about failing to plan, so outline the implications of potential delays and put alternative paths in place, should your strategy need to be amended due to external circumstances. Your roadmap should have as few dead-ends as possible if you want to set your business up for success in 2021.