Many business owners living and working during the pandemic saw flaws in their plans or models: poor allocation of funds, as-of-yet leveraged opportunities, people who needed promotions or pink slips, and so many more.
While there have been setbacks, it’s also been a year of resiliency and innovation. Small business owners pivoted their marketing strategies to align with new objectives, like the marine apparel and goods company that now produces reusable medical gowns.
As a small business owner, this is the perfect time to look back at 2020 and address the year’s challenges so you’re more prepared for what’s ahead. Here are four business planning tips for 2021:
1. Create an emergency fund
The businesses with the best outlook going into 2020 were financially prepared for a crisis. They didn’t know what that crisis would be or when it would hit, but they knew it’s better to be ready for something that never comes than to be blindsided by a crisis.
It’s a good idea to calculate how much you’d need to stay operational for a year without revenue, and start building that up as a reserve. This would obviously be a large chunk of money, so build it up slowly. Bank a small amount on a regular basis and set achievable goals for yourself. A full year is your objective, but even a month’s worth of funds could be the difference between bankruptcy and survival during an economic crisis.
There are also ways that you can manage cash flow in challenging times, whether it’s deferring payments or taking advantage of government programs.
2. Diversify your supply chain
You can prepare your own business for the worst, but you likely rely on others that may get hit harder. Many operations suddenly found themselves stalled this year because a partner couldn’t deliver necessary goods or services ⎯ and a supply chain is only as strong as its weakest link. According to a recent survey, 73 per cent of companies experienced a detrimental supply chain disruption as a result of the coronavirus pandemic.
Rather than depending on a single source for every service, start building an extended network of suppliers. This flexible model will help prevent bottlenecks when a single business is struggling and make you a lot more adaptable to the economic climate.
Also, think about working with more regional suppliers. When transportation is hindered, as it was in 2020, you realize how risky it can be to rely on a global chain. Keeping your suppliers close lets you meet customers’ increasing demands for speed and convenience.
3. Audit your digital presence
Almost every business already has a website, many have virtual stores, and digital documents are ubiquitous. Yet, the sudden push towards total digital caused such a struggle for many small business owners, because they had been treating the digital side of their operations as an afterthought. The core of their business was still rooted in a physical space, and the lack of support over time prevented their online services from growing.
Before you “go digital,” look at the ways you’re already there, and determine what’s working well for your business overall. Once you know what you have, you can figure out what you need to do to prevent unnecessary spending.
If your customers behave differently online than in real life, think about how you’re selling to them. What do they need as a consumer and how can you meet that need digitally? A digital audit will also open your eyes to new competitors you have because you’re online.
On the flipside, are you set up to help your employees work from home? When the quarantine first began, people found they were missing important files that were trapped in the physical office. Make sure digitization is a priority for key physical documents and begin backing up future projects so they’re always accessible. Talk to your staff about what worked and what they feel is missing online. As you begin transitioning back to an office, think about how you wished the last lockdown was different, and set up your digital environment differently.
4. Strengthen your business culture
A crisis situation is the worst time to realize your employees are already feeling overworked and under-appreciated. Eventually, you’ll need to ask more of them, so it’s important to build an environment where they’re naturally willing to give their best.
Take the time to talk with your team. Ask them what they expect of you as their employer. Great work should be rewarded with something valued by the individual – this could mean more money, but is often flexible work hours, skill development or extended benefits.
If you had to reduce employees to keep your business financially healthy in 2020, we have some tips on how you can reach big business goals with a smaller staff.
Get expert advice on financial planning for the future
No one can predict what will happen next, but you can be proactive with your financial planning. We’ll connect you with the resources and advice you need to keep your small business financially healthy – even in uncertain times. Connect with your Business Advisor directly, call 1-888-597-6083 or contact us online to speak to a financial expert.