It’s time to prepare for the second half
For a spectator of a game of football, the half-time break is merely a chance to stock up on some beer, but for the captains, the coaches and the players, it is a crucial few minutes of reviewing and tweaking their game plan.
In a similar way, businesses that do not use some time in the middle of the year to reflect and plan are running the risk of losing the game, says David Morobe, regional general manager of Business Partners. The questions asked in the locker room at half time are strikingly similar to those that a business has to ask from time to time. “Have things been going as planned? Are we ahead or behind with where we wanted to be? What worked well? What didn’t work well? What impact has the competition had on us? What opportunities did we miss? What competitor weaknesses did we not capitalize on? What do we need to do in the second half? What changes need to take place and in what area do we need to up our game?”
The benefits of such an exercise are hard to overstate. It helps the entrepreneur and his key team to crystallize their strategy for the rest of the year, clarify the challenges that lie ahead, celebrate and strengthen the successes of the past six months, and prompt them to make the necessary changes. The process also tends to unlock ideas, strategies and solutions not previously thought of.
For Morobe, this kind of formal planning session is by no means the preserve of big corporations. In fact, it is a way in which small businesses can “optimise their agility”. It is much quicker for a small business to adapt its strategies in reaction to a market challenge or an opportunity. A half-year planning session is a way of ensuring that it makes use of that advantage.
The time that a business sets aside for a half-year review will differ according to the complexity and size of the company, but it need not be long. “It also depends on how good the systems are. If all the information that you need for such an exercise is up to date, reliable and available, then you’ll save time,” says Morobe, who reckons a half a day to a maximum of a full day is enough for most businesses.
Morobe says there is no prescribed way in which such a half-year review should take place, apart from the principle that the cash-flow forecast, which he calls “the holy grail” of a business, must be central to the process. But it helps to take an “all-encompassing” approach, he says, in which you reflect not only on your sales targets, but also on your staff who may need to be re-motivated and your operations – what is working, what is not, and how can you improve efficiency – are some of the questions you may want to answer.
It helps to work according to some kind of structure such as SWOT analyses where the team considers, in turn, the strengths, weaknesses, opportunities and threats facing the business.
Morobe is also not prescriptive over the exact output of such a session. If a whole new strategy or plan is decided upon, it is best to crystallize it in a formal plan, especially if there are a number of team members who have to pull together.
If the half-year review leads to a new finance application or the purchase of a new piece of equipment for example, a formal plan to present to the financier is of course a must. But sometimes all that is needed are a few tweaks to the cash flow forecast and a couple of email circulars. Generally, it does no harm to write down the main points discussed or decisions taken, says Morobe. Rather err on the side of outlining the plan on paper.
A half-year planning exercise is of no use if the business owner is not realistic about what is happening not only in the business but also out in the market. In fact, over-optimistic planning can do harm. Morobe says the over-optimistic estimation of sales is the biggest mistake entrepreneurs make in their planning. It can have disastrous consequences for the cash-flow of the business.
“As the saying goes: there is only one thing worse that singing out of tune, and that is singing out of tune enthusiastically. With a half-year review you want to make sure you’re still in tune with your targets team, and the market,” he concludes.