With the many challenges that COVID-19 brought into the world of small businesses in 2020, it is no surprise that many resilient entrepreneurs are already looking to 2021 in an attempt to prepare for uncertainty. As the aftereffects of a global pandemic continue to cause volatility and unforeseen circumstances, it is important for business owners to remain flexible and expect the unexpected – no matter what that may be. Fortunately, with the economy finally starting to reset, now is the perfect time for small businesses to take a hard look at their business and identify strengths and weaknesses to plan major improvements.
Imagine what your business could have achieved in 2019 if you had advance knowledge that the virus was coming. Would you have done anything different than you had? The success of a small business during these tumultuous times relies on their ability to make quick decisions that may be difficult if they are focused on a single small business plan. While we may not know what is in store for 2021, one thing is for certain – everything can change in an instant. As we have seen, this is a hard truth that many small business owners had to learn the hard way.
Unfortunately, uncertainty is the only guarantee that we have right now, and many businesses are trying to navigate life after COVID-19. If you are not planning for it now, you can be sure that your competitors most certainly are. At the same time, many new companies will be searching for ways to capitalize on the disruption that has occurred. So, how can small businesses start planning for uncertainty when everything is so fluid? In this article, we will help you think outside of the box to ensure your small business is ready for whatever 2021 might throw at it.
Start with a SWOT Analysis
Before planning any year, businesses should take the time to analyze their strengths, weaknesses, opportunities and threats through a technique called a SWOT analysis. Once these areas have been analyzed, it is often much easier to determine which facets of your business will need a little more attention and which ones you can continue to capitalize on to encourage sustainable growth. With COVID-19 numbers surging and the chances of political unrest, your first quarter plan may need to be adjusted if lockdowns or economic changes occur.
A great SWOT analysis can help create guidelines for not only your proposed plan, but it should also consider “what ifs” to enable a pivot whenever it may be needed. At the same time, it is important to ensure you are not only accounting for the business as a whole but keeping your individual employees and departments in mind to have a plan prepared to keep them working – even remotely if possible. All levels of a business must be prepared for change in 2021 to ensure the best experience and keep your business from falling behind quickly.
Create Early Warning Systems
For small businesses that want to be protected from uncertainty, it is important to ensure that early warning systems are in place to prepare for changes that may occur and not react compulsively. One of the best ways to do this is to keep up with consumer trends, follow news stories from a variety of outlets or listen to politicians both locally and nationally to get a pulse on what may be coming. Having a firm grip on what is going on externally that might affect your business through early warning systems can help alleviate the challenge of scrambling to re-adjust.
Proactive businesses will always reap the benefits of reactive businesses because they already have a perfectly crafted plan waiting in case it is needed. This change is critical for modern small businesses to succeed in times of uncertainty and will inevitably continue to play a huge role in business planning in both 2021 and beyond. For this reason, setting up early warning systems that you can trust to provide accurate information consistently is more important than ever. Take time to regularly review this information and connect the dots to make informed decisions about what you should expect in the coming weeks or months.
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Create a Rainy Day Fund
Creating a cash buffer that protects the financial security of your business is a great way to prepare for uncertainty because it allows operations to continue at a limited capacity, even if consumers are unable to shop with you in the ways that they have traditionally. By taking the time to compare expenses, or estimates, with their net income, small businesses can easily identify how each area of their business is performing and adjust their strategies to capitalize on them. At the same time, this could pinpoint areas that are bleeding liquid assets and need to be addressed.
Although often overlooked by small business owners as long as they are still having a steady stream of customers, a simple economic change in 2021 could quickly deplete their reserve assets and create a cause for alarm. Having a rainy day fund can also help provide the architecture or infrastructure needed to pivot to a new sales or service model if the opportunity arises to further protect the business from uncertainty. A good rule of thumb is to ensure your small business can sustain three to six months of reserves if tough times hit to cover overhead, employee wages or production costs. Without a rainy day fund, small businesses will often have to rely on loans to stay afloat.
Ensure Your Team is Prepared
Throughout 2020, millions of people struggled socially and economically and are continuing to look for leadership. Many small businesses are actively employing members of their community and making a difference in their lives, so if you are anticipating a change in 2021 that was signaled from your early warning systems, it is important to keep your team members in the loop and informed. Without advanced notice, a change could become a shock to the system that is poorly executed and hurts your business more than it helps.
Businesses that have a concerted effort to implement change in which each moving part knows the exact job they are responsible for will always be successful during times of uncertainty. In many cases, a contingency plan for the unexpected is only as good as its implementation; however, everyone must play a part in it to be successful. Take the time to prepare your employees from the lowest level to the top to ensure everyone is on the same page and ready to shift their focus at a moment’s notice to the areas of the business that need it the most.
Ready to Get Started?
Are you confident in your business’ ability to survive another year of uncertainty? If you are currently struggling to regain your footing or just want to ensure you have a future-proof business plan, the team at Maennche Virtual CMO is ready to help. If you are ready to start planning but are not sure what steps to take first, speak with one of our small business planning experts!