As businesses enter the new year, it’s time to rethink strategies that have helped before and whether they will in future. It’s not unusual to rethink business strategies, of course, but considering how fast the world works these days, it needs to happen more often – and yet more effectively – than ever before. You can no longer afford to slow down or rest on any past victories, since even the biggest, most successful companies have proved vulnerable to everything from bad publicity to hacks (which itself brings negative publicity and a drop in stock value). Reflecting on 2016 will help you think about what the most effective finance decisions are.
The most obvious starting point for any business decision is acquiring relevant information. As DeCode, a leading information tech firm, notes:
“[Information] allows a business to make informed decisions by presenting data in a way that can be interpreted by management. In this context, customer information would be useful in providing metrics surrounding client/customer engagement to determine better ways to engage or work with your clients.”
Information is merely the facts of the matter – data points that are put into contexts that help establish a narrative of what your business looks like. This isn’t meant to be a stage of judgement, since information gathering is simply about opening your eyes to the current situation your business is in. It’s only after putting this information into relevant contexts that it begins to actually tell a story about where you’re doing well or badly.
In an extensive survey, McKinsey asked a number of questions to businesses about how they make decisions. In terms of making a good, financially sound decision, the researchers concluded:
“Decisions made at companies without any strategic planning process are twice as likely to have generated extremely poor results as extremely good ones—more than a fifth of them generated revenue 75 percent or more below expectations. This may indicate an overall lack of rigor at these companies.”
Planning is everything. Once you’ve acquired the necessary data you can then make the best decisions, since you’ll be operating with facts not fantasy.
One of the most important second steps to take after acquiring data is to look at your options. This is particularly important when it comes to finance. For example, if you’ve concluded what matters is acquiring the latest, best equipment, it might be time to upgrade. You could find that your machinery is not keeping up with demand or your competition. What are your options?
This is where you need to look wide and not ignore any avenues. It could mean you reconsider your direction as a business. It could mean looking at machinery asset finance, which allows you to acquire machines or equipment sooner. This can be factored into your sheets and finances, letting you pay back what you owe, while finding ways to benefit the business. The point being that in business, especially in 2017, there’s no avenue you can afford to overlook or dismiss. But, all your decisions must rest on data, not desperation or fantasy.
The digital world
Everything changed with the internet and it will continue to affect every aspect of business. Just look at what happened when President-Elect of the United States sent a single Tweet.
“The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th,” Trump said.
As the Independent reports:
“Following the tweet on Monday morning, shares of the aerospace company plunged by more than 4 per cent in early trade. Based on the number of shares outstanding, the tweet has shaved just over $3.5bn from Lockheed’s market value.”
Naturally, the point isn’t that it’s a Tweet as it is the fact the message comes from Trump. However, the point remains that such a simple message being broadcast would never have had such an effect if the internet didn’t exist to make it so public so quickly.
Businesses today can lose credibility thanks to anyone – seniors or juniors – in companies making awful mistakes or acting irresponsibly on social media. But, instead of looking at the internet as a way to harm your business, look at it as a way to enhance it. 2017’s finances are going to depend heavily on how everyone reacts to the changing digital landscape. People could find themselves considering investing in future businesses which show promise, based solely on their website. You should take advantage of new marketing opportunities and ways to impress future investors, by making use of smart, young talent that knows how the internet works.
These are just some ways you can make smarter decisions that will have enormous benefit for your finances.