Whatever you thought your budget would look like in 2020, we’ll put our money on that budget changing dramatically by March. Here’s what we think you’ll need to do to prepare your plans for 2021.
If you’re like most leaders, the budget you set coming into 2020 became obsolete within 90 days. Yes, all that time prepping and planning was for naught in the face of COVID-19. That doesn’t mean you should abandon budgeting, it just means you need a new approach.
In the face of a more dynamically changing environment, streamline your budgeting and planning processes for a more nimble and efficient approach. Start by getting your marketing team aligned around sales goals. Then identify your key marketing activities and priorities and ensure your focus of resources on the highest-performing channels. Ask, “What are the key business drivers of recovery in 2021?” and, “What are the key marketing jobs that must be done?”
As you review businesses, plans, and planning cycles from top to bottom, also consider new budgeting approaches. For example, you can give zero-based budgeting a try as you evaluate scenarios — from what levels of spending are truly required to keep the lights on, to what’s required for aggressive growth. During zero-based budgeting, be sure to ask, “What long-term marketing activities can’t be sacrificed in the short-term?” so you don’t toss out all long-term initiatives.
Historically during budgeting, many teams set aside funds for testing, experimentation, innovation, or other “nice-to-have” initiatives. This year, CFOs are giving guidance to include a centrally controlled pool of funds (approximately 10 to 15%) to be used in certain scenarios as business goals are achieved. Ask, “What do you wish you could include in your 2021 plan?” When the funds become available, you can use new approaches to distribute these funds, including team presentations to vy for the extra funds.
If it is financially feasible, a true emergency fund can save the life of your business. Statistics have shown that 90% of businesses that do not reopen within five days of a disaster will fail within a year. This is a frightening metric, but really underlines the importance of savings and a contingency plan.
When you have flexible funds during a crisis, this also allows your business to invest in marketing where other businesses have to cut their advertising costs. This allows your dollars to go further, as you take a larger share of the voice in your field.
In 2020, speed to market has been a game changer, and 2021 will be no different. Breaking the annual plan down into quarterly marketing roadmaps increases flexibility and an agile approach. Similarly, if you have large initiatives, break them down into monthly and quarterly investments. Get your KPIs and scorecard set up for monthly and quarterly review, and then set up those quarterly and monthly reviews. Then, bring those metrics into rolling forecasts that are closer to real-time.