Why not for profits need to plan the year ahead

 

man asking where next

At this stage of the financial year, the thought of planning the financial year ahead has probably crossed your mind. If your organisation has a formal planning process that is in place for the start of every calendar year, you may have started planning already.

Before we go into planning mode, or agonise about the mere thought of doing any sort of planning, is planning ahead even useful? Is it just a waste of time?

Below are three reasons that planning is not a waste of time, but a valuable exercise.

 

Opportunity to be proactive

In today’s connected world we are constantly being pulled in a million and one different directions. We receive endless updates about legal changes and Government funding; our clients have many different means to contact us and, of course, staff members have varying and changing needs to be addressed. All this to say, that in the middle of the working year, it is very easy, and at times difficult not to be, operating in a reactive state. This can be especially true of leaders of organisations.

The planning process however provides us the opportunity to be proactive. When beginning the planning process, particularly planning for longer periods such as a year or two rather than a week or two, our minds move towards exploratory, opportunistic type questions such as ‘what do we want to achieve’, rather than reactive type questions such as ‘what needs to be done’. After all, if you ask somebody what they plan to do in the next 12 months you may get a proactive response such as ‘achieve xyz’, whereas if you ask them what they plan to do in the next week you may get a more responsive type answer, such as ‘finalise our client report’, which is due the following week.

Planning allows us for a brief moment to put the day to day tasks, that form part of our lives, to one side and ask ourselves a handful of longer term, more meaningful questions.

 

Revisit what’s important

What is important to your organisation? Why does your organisation exist? What problems are being solved and what needs are being addressed?

These are the type of questions that are able to be asked in the planning process, when the day to day tasks are momentarily put on hold. These types of questions, with the big picture in mind, allow you to revisit what’s important to both you and the organisation.

When revisiting what’s important, there are two timelines in which we must consider. What is currently being done and what needs to be done.

When reviewing what is currently being done, consider the day to day tasks that are being undertaken, but that you feel do not necessarily align with the organisation vision and/or are not the most efficient use of resources. Tasks may include pursuing and completing work that at one time was in line with your organisation’s mission, but overtime has changed and is no longer as aligned as it once was. Other examples may include an inefficient use of employees’ time or archaic systems that unnecessarily waste time.

Are you happy with the current state of play? Are there things you would change in your own work and that of your organisation?

In looking to the future, questions can be asked about the type of organisation you want to be and what you’d like the organisation to achieve. This an opportunity for aspirational thoughts to flourish. It is difficult, if not impossible, for the mind to wonder and for you to imagine what your organisation could achieve, and the impact it could have, when you are in the middle of your day to day activities. Planning allows you to take a longer term horizon. The practical consequences are that you can plan actions for the year ahead, that lay the foundations for your longer term goals.

 

Improve performance

Planning has the potential to improve an organisation’s performance by providing an opportunity to focus on how best to allocate resources, how to solve key problems and by bringing improved focus and efficiencies to staff and leaders.

Allocation of resources

With the opportunity to be proactive and revisit what’s important, an organisation is able to review where resources are being allocated and determine if this is the most efficient use of the resource/s in light of what’s important. All organisations have limited resources, particularly in terms of time and money. Even slight reallocations of key resources can impact overall organisational performance.

Solve key problems

Without planning, you risk just doing more of what you’ve always done, without regard to external market context, or internal changes. As market conditions evolve and internal changes occur, problems are likely to arise. Planning provides the opportunity for key personnel to work through and solve problems affecting the performance of the organisation.

Improved focus and efficiencies

Planning allows for a strategic roadmap to be created in which staff and leaders can align to. With an aligned focus on tasks and functional activities, efficiencies are inevitably gained. Furthermore, leaders who are equipped with a strategic roadmap and direction for the organisation are able to make better, more informed decisions in a more efficient manner.

 

If you’d like any assistance with planning, please contact 1300 763 505 for an obligation free consultation with one of our Business Consultants.

 

Dimitri Matsouliadis
Business Consultant
Email: dmatsouliadis@cbb.com.au
Phone: 1300 763 505


How to measure ROI with a zero-based marketing budget

man thinking in front of boardThe simplest and easiest way to set next year’s marketing budget is to take last year’s budget and simply add the percentage that you want to grow by.  Within 60 seconds your new marketing budget is set, but this doesn’t allow for external market factors like new providers, changing government policies or the needs or wants of customers.

Alternatively, you could adopt a zero-based marketing budget. This will take longer to put together, but it will make you ask the hard questions about the outcomes you want, how much you need to spend to achieve them and the different options available to you

 

Where to start with a zero-based marketing budget

The most daunting thing about having a zero-based marketing budget is staring at a blank white board or empty spreadsheet.  The good news is, if you look at your marketing strategy, you’ve already got a starting point.

If you don’t have a marketing strategy and plan, a good place to start is by reading one of our previous blogs – Planning for future success

In your marketing strategy you would have identified your strengths, weaknesses, opportunities and threats, the market and your marketing funnel.

Use this to start writing down the high-level things you think you need to do to attract new customers and retaining existing ones to either existing or new services.  For example, it may be that your existing customers only use one of your services and don’t know about the other services you offer. It’s always cheaper to cross-sell to an existing customer who knows you than to acquire a new customer.

From here you can list all the communication options that you think you could use to solve that issue.  At this stage the more ideas the better, as there’s no right or wrong answer. You can, and will, logically reduce the list down later.

Once you’ve written everything you can think of, walk away and revisit it the next day. This will give you time to reflect on your ideas and add in any new option(s) you’ve thought of.

 

Reviewing your options

With all your options listed down it may seem like an impossible task to decide which ideas to keep and which ones to delete. By researching the cost and comparing it to the possible result of the activity, you can logically eliminate ideas.

For example:

During the analysis you’ve realised that hardly any existing customers visit your reception, so the cost per result of doing the activity is very high compared to the other options.  Therefore, you’d decide not to do it.

However, the other two ideas come at a relatively low cost compared to the potential gain: a combined cost of $1,800 vs the potential of an additional $100,000 in revenue (20 enquiries at $5,000 potential revenue each), so you decide to add them as lines to your budget.

Measuring the ROI

Not only does this analysis help you decide what activities you should do because you have looked at the potential results, it also allows you to measure the return on your investment. By measuring where your engagement, leads or customers have come from throughout the year or per campaign, you can measure which of your marketing activities were effective.

Here’s the same example but we’re measuring the ROI:

As you can see, the results you expected weren’t the actual outcomes but if it’s your first year of doing this or if there are changes in the market, then your expectations are unlikely to match the results exactly. But what it does do is give you a benchmark for the next year so when you go into the planning phase again, you use the data from this year to refine your predictions for next year, to be more accurate.

 

Benefits of a zero-based marketing budget

Not only does a zero-based budget help you justify your marketing budget recommendations, it also helps you prove the ROI of your investment; something a lot of organisations struggle to articulate.

Whilst you can argue for hours whether to use a first touch or last touch* attribution method to decide where to credit the win, the truth is, unless you have sophisticated systems reporting and analysis, you’ll never know.

A zero-based marketing budget will get you to challenge why you are doing some of the existing marketing activities, and whether they are still worthwhile.

The important thing is by using the zero based budget, you are planning for success and learning to monitor your results which will help you improve your future activities and lead to marketing dashboards that help drive your organisation forward.

 

If you’d like any assistance, please contact us on 1300 763 505 for an obligation free consultation with one of our Business Consultants or book an appointment here.

*First touch – where they first found out about you, the new service etc. OR Last touch – what was the final thing they saw before they acted.

Andrew Ellis

 

Andrew Ellis
Business Consultant
Email: aellis@cbb.com.au
Phone: 1300 763 505

 

 


Financially, which way ought you go from here?

“Would you tell me please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the cat. “I don’t much care where…” Said Alice. “Then it doesn’t matter which way you go,” said the cat. – Lewis Carroll, Alice in Wonderland

Your organisation is in a current position. It has a certain level of revenue, a certain number of employees and makes a certain impact.

From a financial perspective you need to know where you ought to go from here. Asking this question allows the following:

  • It forces key stakeholders to consider the future of the organisation
  • Multiple parties can be brought into an overall vision, including board members and third-party stakeholders
  • Realistic operational and strategic goals can be set
  • Potential pitfalls can be identified before they happen
  • An actionable road map for the organisation can be developed

As we move into 2020, the question arises, financially, which way ought you go from here?

Continue reading…


Three financial ratios to instantly assess your organisation’s health

When analysing your organisation’s financials it can be easy to get caught up in an array of numbers and hard to know the financial health of your organisation. Key financial ratios can help you focus in on particular financial areas and highlight any potential risks that may be present.

The three ratios below highlight keys areas that all organisations should know and monitor. These three ratios and categories help indicate the financial status of an organisation and can be used to very quickly assess financial health.

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CBB Community Business Grants

Do you feel fully on top of the business-side of running your organisation? You might be delivering outstanding social impact, but are you confident that your business practices are fit for purpose?

We work with hundreds of not for profit organisations and we see first hand the challenges of juggling the operational realities of delivering community services with the management and planning needed to run a purpose driven business. We know that many organisations do not have the time – and sometimes don’t have the in-house skills – to invest in adequately planning ahead, managing corporate functions, and continuous improvement.

As part of our commitment to reinvest some of our own funds into supporting the sector to build its business capability, we are offering a series of Community Business Grants in 2019/20. Grants will be offered on a staged basis through 2019/20 and will take the form of pro bono consulting projects in areas such as understanding your market opportunities, and financial management.

The first round will open to applications soon. Sign up for news and updates on our Community Business Grant program here, including announcements as rounds open, and access to the grant guidelines.

For any queries on our Community Business Grants contact consulting@cbb.com.au.

Jane Arnott
General Manager, Consulting and Business Services
Email: jarnott@cbb.com.au
Phone: 1300 763 505

 


Five ways systems and processes can negatively affect your organisation

“A business that looks orderly says to your customer that your people know what they’re doing.”― Michael E. Gerb

Systems and process, the ‘how’ you do the things you do in your organisation, may seem boring and of not much importance, but they matter more than think.

Inefficient ways of conducting your work can include using outdated tools or technology, double handling information and a lack of transparency in the work being done. These are some of the most common ways systems and processes are outdated and inefficient. Using fax, paper forms and technology that hasn’t been updated in years are specific examples of these.

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Building a cash bridge

Building a cash bridge

“When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000 pound trucks across it” – Warren Buffett

All organisations need cash to live, breathe and operate on a daily basis. Cash is very much like oxygen, not really a big deal until you don’t have any and then it’s a really big deal, really quickly. Furthermore it doesn’t matter how healthy you are, if you’re without air for a short period, you’re in trouble.

Organisations are exactly the same. An organisation can be extremely prosperous for many years but become unstuck if they are left without the required cash to meet their commitments for even a short period of time. How long will employees be willing to work without pay? How long will suppliers continue to provide their services on credit?

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Should you diversify your income?

We’ve all heard of the expression – don’t put all your eggs in one basket. It’s a valid expression with merit. If you earn all your income from just one source and that goes away, then it’s highly likely that your organisation will go away too. So does that mean you should diversify your income? Not necessarily.

Before we jump into whether or not you should diversify the income of your organisation, we should cover what diversification of income is.

Income can be diversified in two ways

1 Different providers of the income

These are the actual people and organisations who hand over their money to your organisation. The two extremes here would be one customer vs thousands of customers. It worth noting that we are talking about people and organisations that provide income to your organisation and as such this includes grants and donations. Another way to look at this may be one annual grant vs 20 annual grants.

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The deeper purposes of a budget

“Failing to plan is planning to fail” – Alan Lakein

A budget may seem like a boring administrative task that “needs” to be done by the finance team to keep stakeholders like the board happy, but a good budget serves a much deeper purpose.

A good budget will help your organisation:

  1. Deliver its social impact
  2. Know if you’re on track
  3. Plan for success
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