Decoding Budget 2021: A Sales and Marketing Perspective

decoding_budget

An Overview of How Budget 2021 can Help Sales and Marketing to Pave the Way for Business Recovery this Year

Shortly before the annual budget for FY 2021-22 was announced on February 1, 2021, Prime Minister Narendra Modi made an interesting comment about its nature. He said this budget was to be viewed as a part of a series of mini-budgets that the government released in the form of various packages throughout 2020 in an attempt to deal with the COVID-19 pandemic. 

This announcement is very important in terms of what it means for the nature of financial planning in the country. It signals a parting of ways with the traditional format of budgeting for one year at a time. This does not, however, mean that this budget does not cover exactly one year. We will discuss the implications of this in more detail below. 

Key Highlights

Budgets generally consist of two major activities — revising the numbers from the previous year’s estimates against actuals and proposing estimated revenues and expenditures for the coming year. A quick comparison of major economic indicators with previous years’ numbers provides a healthy perspective on the economy’s long-term trajectory. As such, here are some important numbers:

FY 2020-21FY 2021-22
9.5%6.8%
Fiscal Deficit
FY 2020-21FY 2021-22
7.5%5.1%
Revenue Deficit
FY 2020-21FY 2021-22
10%14.4%
Growth in Nominal GDP

The revised expenditure of FY 2020-21 is INR 34,50,305 Crore, which is 13% higher than what was proposed in the previous year’s budget. Yet, the proposed expenditure for 2021-22 is INR 34,83,236 Crore, only INR 32,931 Crore more than the actual expenditure in 2020-21. 

A few factors support the conclusion that the proposed numbers here are highly ambitious at best: proposed massive infrastructural projects, extensions in tax deadlines, Central GST dues to States, and expenditures on the 2021 Census.

Let’s discuss what this means for businesses in India.

Why You Should Depart from Traditional Financial Planning

In the likelihood that the government will be unable to stick to the numbers proposed, you can expect the economy to underperform consistently. As such, you need to reduce your dependency on the economy as much as possible. Departing from traditional financial planning is an excellent start to doing so.

Here’s a look into why traditional financial planning and rigid budgeting could hurt your business interests.

1. The Pandemic is not Over

Even as businesses enter FY 2021-22, the biggest market disruptor of 2020-21 continues to loom large. Vaccination drives have not yet shown complete success and chances are that the virus’s ability to mutate rapidly could still render the vaccinations impotent. So, don’t assume that things will certainly return to normal within the year.

2. Market Unpredictability

The government’s aim to reduce the fiscal deficit by 2.7% means it will not be able to inject funds into the economy to revive it. This leaves the market to fend for itself, meaning that it will likely behave in highly unpredictable ways.

3. Social Media Market Manipulation

In the wake of the groundbreaking effects Reddit’s WallStreetBets forum had on the US financial markets and given the appearance of similar forums like DalalStreetBets, there is no telling where social media market interference could go. Unless lawmakers and regulators like SEBI move to prevent such unprecedented market activity, investment markets must be viewed as unreliably risky avenues for revenue generation.

The Need for Financial Agility

Although annual financial planning begins to seem more obsolete by the day, it continues to remain integral to the measurement of business growth. So, completely scrapping the annual budget format in favour of arbitrary mini-budgets is unlikely to serve you well. 

Instead, you could create an annual budget that is essentially Plan A, B, C, D, and E, all rolled into one. This can be achieved by creating a network of dependencies within the budget, in the form of if-then propositions. Doing so will give your business the critical ability to smoothly adapt to unforeseen circumstances in the domestic as well as the global economy.

Remaining financially agile is a tricky feat to achieve, especially for bigger firms with larger proportions of fixed assets. Financial agility consists of lightening the load of fixed and immovable assets without exposing the company’s funds to excessive risk. In the absence of massive government expenditure along with widespread civil unrest, India’s economy is unlikely to have reliable agile investment options.

Reimagining your value generation strategy is critical in 2021-22. Revenue generation is likely to take a hit in the struggle between managing risk and staying agile. Here are a few thought-starters on how you can use sales and marketing to maximise your profit-generation efforts instead.

New Opportunities: How to Use Sales and Marketing to Stand Out

Traditional financial planning involves evaluating available funds and setting aside capital for managing company assets and investing in revenue generation. Our recommendation here is to invest a minimal amount and take what is necessary for asset renewal and keep as much capital free for operational use as possible.

Financial agility requires you to minimise the load of capital assets and keep capital accessible for use in your regular operations. This is what helps ensure that your dependencies on the market highs and lows is limited at least in terms of capital generation. Now what is critical to keep your business on track is to ensure that inward cash flows make up for the revenue you would typically generate via investments. One of the most effective ways to do this is to pump funds into your sales and marketing efforts.

However, pumping funds without doing your research first is a recipe for disaster. If you are going to prioritise sales and marketing over capital investment you have to understand that the usual margin of error will not apply. When marketing and sales are being used to make up for revenue that you could have made through investment, you cannot afford to run experiments to see what works and what doesn’t. You will need to conduct intensive and thorough research before you implement ideas and be sure that the campaigns and strategies you run are going to give you results. If these don’t work, you’re left with little to nothing that you can fall back on.

It is also incredibly important to invest in finding the best talent as well as the best available technology to help implement your campaigns. In the process of adapting to a locked-down world, technology has advanced by leaps and bounds. Newer ways to reach, influence, and engage with your audiences have become available, as have technologies to organize and coordinate within your organization. Right now is an excellent time to capitalise on both these opportunities by finding and integrating cutting-edge technology into your processes.

Sales and marketing have a significantly lower capital requirement than investing for revenue generation. Focusing your efforts on these two aspects of your business will involve investing in extensive and detailed market research to help you truly understand the new realities within which you will be operating. 

Conclusion

Varying from the norm may seem like an unnecessary risk on the tailcoats of the past year, but sticking to norms in a rapidly evolving world is riskier than it appears. To keep your business shipshape through the turmoils that are likely to develop throughout 2021-22, developing resilience by reducing external dependencies is a good idea. Instead, investing in strategically scaling up your business through marketing and sales is a great way to diverge from the norm and stay on top in the coming fiscal year.

For more detailed tips and advice on how to leverage your sales and marketing techniques in 2021,
get in touch with us now!

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