When running any medium or large business, having a plan is key to the long-term success of your operation. However, this is especially true of the retail and hospitality sectors, where strong operational planning and a good forecasting readiness can be the difference between success and failure.
Diligently practising both of these principles not only helps your business to weather any hard-to-predict external changes to the marketplace but also means you are well placed to take advantage of any upcoming opportunities and ensure future growth.
Operational planning and forecasting readiness – keys to growth
Operational planning refers to the system of developing a timeline for the growth you want your business to achieve over a given time-frame. It involves drawing up a series of goals, milestones and objectives which you want your business to satisfy, and deciding when you think you should be able to achieve them.
These plans typically set out all business and financial activity for the next 1-3 years, and often ask questions such as ‘where are we right now?’, ‘where do we want to be by a given point in time?’ and ‘how do we get there?’.
Forecasting readiness is a related activity but places more emphasis on predicting external factors. It involves calculating what future events are likely to take place and how they will affect your business’ operation.
It also involves estimating future sales, profits and expenditures, and anticipating changes in demand or scale. It is so important because in a volatile economic environment, being prepared for changes and knowing how to absorb the impacts of these changes is very important to the long-term viability of a business.
This kind of forecasting can help businesses navigate things like changes in legislation or a downturn in the economy, but can also help them take advantage of opportunities as and when they arise by, for example, holding back sufficient reserves in capital to fund tactical growth at the right moment.
How to carry these out
The important thing in terms of operational planning is for these plans to be drawn up by people with real experience of the business, and by the people who will see the plan implemented. This is important because it means that the goals and activities set out in the plan will be realistic, feasible and tied to the business’ actual needs and capabilities.
For example, this may involve speaking to regional managers of a hotel or retail chain as well as to those on the boardroom level, in order to assess the micro and macro needs of the business. Useful things that can be decided by this kind of planning are staffing and resource requirements, standards in quality, and the introduction of new services or products.
To put together an effective business forecast it is important to use the most up-to-date data available, and to predict the worst as well as the best. This ensures your plans are up to date with all the latest developments, and that you are prepared for even the worst-case scenario.
Another important factor is to keep your forecasts reactive, so that should something big change during the period covered by the forecast that was not already anticipated, this can be factored in and predictions revised.
Why are these important for my business?
As sectors with a typically large amount of employees per business, retail and hospitality businesses can both be heavily affected by changes to the law, especially around labour rights, minimum wage legislation or freedom of movement.
These are hot-spot areas which are frequently affected by legislative changes, so being able to anticipate anything which may impact your profits well ahead of time will help you adapt to whatever the new conditions are after any changes come into effect.
Retail especially is a reactive sector which changes with the market’s demands. Customers will not always want to buy the same products and predicting shifts in consumer trends, as well as anticipating economy-driven changes in people’s spending behaviour, can give you a head-start when it comes to consolidating profit.
This applies to the hospitality sector as well. Market-driven in a different way, being able to predict customers’ needs and staying ahead of the curve in terms of innovation will ensure your brand is seen as a market leader and not a follower.