Making Plans For Your Small Business In Uncertain Times
As small business owners continue to adjust to pandemic conditions in their cities and industries, it seems odd timing to sit down and draft your business plan for next year.
However, as counterintuitive as that sounds – amid all the uncertainty – experts and successful entrepreneurs say it’s imperative for businesses to look ahead to next year, now.
In fact, the current uncertain circumstances make a plan an even more urgent task.
“This is the time for forward thinking; companies that thoughtfully plan for the future have a much better chance of surviving,” writes Terri Williams in The Economist.
The task seems particularly daunting for companies that have struggled to keep up since the onset of the pandemic, from adjusting their operations at physical locations to staying ahead of changing levels in cash flow, staffing and customer bases.
“When there is a huge discontinuity, like the one we are experiencing now with the coronavirus, you have to recognize that the future is going to come at you a lot faster than it might have otherwise,” says Mark W. Johnson, cofounder of Innosight, a strategy and innovation management consulting firm, in The Economist article.
Here are 4 points to consider as you develop a plan for your small business.
Review finances in different scenarios.
Use both conservative and best-case scenarios as you map out your finances for your company, advises tech entrepreneur Lyron Bentovim in a post for CEO World Magazine.
The uncertainties of the pandemic and other “wildcards” that have the potential to impact your business call for “prudent levels of conservatism” when you outline your financial plan, writes Bentovim, founder and CEO of The Glimpse Group, a New York-based virtual reality company.
“That being said, you also can’t be too conservative and cut out the capacities that will help you succeed when the economy picks up again,” he writes. “There is a delicate balance between staying conservative if the future seems bleak and being positioned well when the future looks favorable.”
Decide what changes were good ones.
Don’t be too quick to envision your business pre-Covid, particularly if you’ve made some thought-out changes like new products, services or technology these past few months.
Instead, take a good look at what’s working under these present-day conditions.
“Before you can look ahead, you need to have a clear picture of where your business is in the present,” writes Mark Robson, a financial modeling expert at Grant Thornton, in a post for Insider, a UK-based regional B2B media company.
“This means identifying the parts of your firm which are performing well and the areas where a change of approach might be needed.”
There may be some changes you’d like to “undo,” such as staff reductions, so decide on criteria that would allow for you to turn those back.
Conversely, look at the changes that could serve your company well going forward. Are there new tools, technology or services that have increased your capabilities to produce? For example, systems that enable pickup service, or faster internet and communications technologies that have increased ecommerce and improved customer experiences.
What about all the uncertainty?
Keep in mind there’s always been some uncertainty when you looked ahead for your business. You didn’t always have answers on what the future would bring.
So just like then, you work with what you know now. Identify what you want to achieve in the year ahead and outline what it will take to get your business there.
“The fact is, you know more about the future than you think you do, because you know your industry and your markets.” Johnson says. “If you look long and hard enough at them, you’ll be able to discern patterns and trends that have longer-term implications.”
Try not to think of uncertainty as risk, advises Geoff Tuff, principal at Deloitte Consulting, in the Insider post. Just plan for different scenarios. Also, don’t get hung up on one vector of uncertainty.
“The trick to building resilience into your strategic plan is to ‘mash together’ multiple uncertainties into divergent scenarios of plausible futures which you then place bets against,” says Tuff, co-author of 'Detonate: Why—and How—Corporations Must Blow Up Best Practices (and Bring a Beginner’s Mind) to Survive.'
Remember your vision.
This is a good time to revisit your initial vision and entrepreneurial spirit to help bring innovative ideas to your plan.
“Despite the uncertainty, entrepreneurs must remain motivated by their passion. Smooth sailing gets boring. Learn to enjoy the rougher seas,” writes Bentovim in the CEO World article.