Hey, it’s almost February! Congratulations. You’ve gotten your year started and the 2021 budget is officially in full swing. Bet it’s going just how you planned it, right? You put time and research into crafting your budget, you make educated assumptions, and put in the work to get ready for the new year. And I’m sure you got it all right, and if you didn’t, I bet your boss is being very understanding.
Alright, enough sarcasm.
Of course your projections weren’t right. You were asked to budget and plan for an operation coming “back to normal” after a year of blows to the head that nobody could have anticipated. The good news is that means that hey, you’re probably up from last year. But that’s primarily because you’d have to be. The world shut down last year, and even though the pandemic isn’t over, the worst of the turmoil seems to have passed.
What was your process of making a budget like? I’d imagine it was a lot of, “Hey, have you tried parsing your percentages? Two percent, two-and-a-half percent, could you get three percent?”
Odds are, that’s the game you had to play. Because that’s the game that businesses have been playing for years. Those are the rules of the corporate world: Boards of directors want to see budgets. And unfortunately for you, that means being taken to task when your projections (made with none of the knowledge you’d need to be accurate) are less than perfectly accurate.
Sound about right?
If any of this resonates with you or keeps you up at night, I’ve got some guidance to simplify this process and remove at least some of the associated headaches.
First and foremost, the good news: It’s going to be a better year. It’s got to be a better year; we’re coming off the end of the world. People are finding their feet, businesses are stabilizing, and life is starting (slowly but surely) to resume. And this trend is going to continue as coronavirus vaccines continue to roll out and social distancing measures become less crucial to public health (granted, that’s probably a ways away yet).
But let me be completely clear that things are not going back to normal. They can’t, because normal is gone. It died somewhere between the rampant change in office culture and the fundamental distortion of commerce as we know it, both due to the pandemic. And if you budget for 2021 as a whole, you’re probably seeing that “normal” planning isn’t getting you as far as it used to.
Now, all you can really do is build your plan and create it based on all of the (necessarily limited) information that you have. And whatever you do, stop trying to plan a calendar year in advance. Instead, try limiting your assumptions to quarterly bases—and let me be clear, “assumption” is exactly the right word. These aren’t inferences or educated guesses. None of us have lived in the aftermath of a pandemic, and none of us know what the world will look like in six months.
That’s the advice I’ve given to all of my clients for months. You can sketch something out, but ultimately, we’re all learning how to live right now. And yes, your community is going to start re-emerging in the coming months, but there’s no reason to suspect that it will present itself in the way you remember it.
If last year was the time for crisis management, this year’s theme needs to be dynamic management. That means that you’re going to need regular feedback loops. You need to know what’s happening on the streets, what you’re getting from your advertisers, how business reopening is progressing, all of it, because all of it is going to tell you about current business conditions and needs.
The danger of this model is getting overconfident and trying your hand at long-range projections, then setting goals for July based on what you knew in November of the previous year. And that is going to result in one of two things: One, that you set up an “easy” goal that you still somehow end up missing, or two, that you set a goal so grossly out of reach that nobody seriously tries to hit it.
Don’t set your people or your organization up for failure like that. Set them up to roll with the tide, because that’s the best that any of us can do right now. You’ll still misfire, granted, but you’ll misfire for a week or a month, not a year. And as we face a world that is still radically different from the one we’ve grown used to as seasoned professionals, we’re left with the choice to either bend or break.