You may not be able to run your business exactly according to plan next year. If it’s anything like 2020, 2021 could be a challenging time for many small businesses around the country. With so many unexpected events and unpredictable impacts possibly in store, business planning for the new year is more important than ever. Creating a sound business plan today will help you know your options and be better able to adjust quickly tomorrow.
The process of planning is as valuable to your business as the ultimate plan you make. The research you do, the numbers you crunch and the processes to monitor, measure and report, all provide important inputs to your plan. Planning for small-business success is like studying a road map. When doing annual business planning, you determine where you want to go, how best to get there and also keep in mind alternative routes to take if things change.
Business planning for 2021 should begin with goal setting. Take a look at how your business performed in 2020. Did you meet your goals? Take a deep dive into your data to see when, where and how the challenges of the last year had an impact on your results.
Given everything that has happened and future trends, what are realistic small-business goals for the new year? Perhaps your small business is struggling to survive. Or maybe it’s on the rebound. Some businesses actually grew in the unusual climate of the last year. Your goals should fit accordingly.
Small-business challenges are multiplied in times of uncertainty. Take special care to consider several different scenarios when plotting out your strategic business plan, particularly the part that includes the new-year marketing plan. Doing so will help you develop workarounds, alternatives and completely new strategies that may even transform your business for the better.
Start your annual business planning as soon as you can. It’s better to start with incomplete data and update it as you go along. If you wait until you have everything in hand, it will already be too late.
When is the best time to start business planning for the new year? For many businesses, the end of the third quarter (September 30) gives you enough information to start with the basics. The fourth quarter (October 1 through December 31) is often busy, so getting a jump on planning helps. Even if your plan isn’t complete, it’s better to have a partial plan in place before the end of 2020 than to delay.
The best place to start your strategic business plan is with your finances. Review your 2020 books, paying particular attention to cash flow, overhead costs and variable costs. Do you have seasonal fluctuations? What events typically influence these numbers? How do the changes over the last year impact past patterns and future expectations?
It’s important to understand so-called normal financial patterns of the past and separate them out from the unusual situations that took place in 2020, such as government-ordered shutdowns. All the information is useful, but some data is much more likely to apply to your business well into the future than other data.
Take a look at your 2020 strategic business plan, especially your underlying assumptions. What was different in 2020? What do you expect 2021 to bring? If you’re like many small businesses, you made changes on the fly during the course of the year. You may have been able to cut or delay some expenses. Perhaps you were able to reduce business energy costs. Do you think the changes you made could end up being permanent, or at least long term?
As you look at month-over-month and year-over-year revenue and costs, try to understand what drove the outcomes so you have context for business planning for 2021. It isn’t easy to do, but compare your business to your competitors. Did you do better or worse? What are they doing that’s different? What’s working in your field, and what isn’t?
Top consultants have developed many models for analysing a business. You can easily adapt them to your particular situation for your small business. The insights you get can help you with new-year business planning. But different models help with different aspects of business planning. For instance ROI, return on investment, helps you to balance costs with expected results. It’s grounded in dollars and cents, helping you weigh different investments to decide which are going to bring in the most money for your business.
But what if you want a way to view your business that isn’t strictly tied to profits and losses but could help you prioritize? For that kind of model, you may want to try a SWOT analysis.
SWOT stands for strengths, weaknesses, opportunities and threats. This classic analytical model helps you clarify the strengths of your business, your weaknesses, the opportunities you might have and the threats that could damage your business.
Take the example of a restaurant business. A SWOT analysis may look like this:
Now, you have a sense of what your restaurant may need to do. At this point, you can go back to the ROI model to see what would be a cost-effective solution. For instance, if you were thinking about signing up with a third-party food delivery service to reach more customers, how many deliveries would you need to make it worthwhile? Going back and forth between models in this way can help you make the best decisions going into the new year.
The move toward online business has been underway for decades, but it increased dramatically in 2020. If you don’t have the ability to service customers in the digital world, you could be leaving money on the table.
Many businesses can benefit from having a digital aspect. People naturally think of e-commerce or restaurant delivery apps, but many other kinds of businesses can find solutions in the online world, too. Say you have a plumbing business. You can let customers schedule service appointments and then update them when you’ll arrive via their phones. You can bill, take payment and provide a receipt online, as well.
Look for ways to provide convenience to your customers and take advantage of the digital world to promote your business, such as participating in a virtual Small Business Saturday.
No strategic business plan is complete without a new-year marketing plan. Talk to your customers. Market research doesn’t have to involve hiring a pricey specialist. You can uncover opportunities by taking the time to ask customers about their lifestyles, needs and wants, either in person or via email or an online survey. Many will tell you exactly what they think of your business and will tell you how you could do better serving them. With a little information, you can build a winning new-year marketing plan.
But think twice before going with the same old methods. This year has brought many changes, so you may want to think about new kinds of digital media, such as a social media platform that your customers may be inclined to use. However, in-person opportunities may also be effective, as people are eager to get out of the house. Sponsoring events, painting the side of a truck and renting billboards in strategic locations could also raise your profile.
Good employees are invaluable to a small-business owner, and they’re difficult and costly to replace. So, it pays to hold on to your staff, especially those in key roles. Many people are struggling with the new normal, including parents with children learning at home and those who are adjusting to new commute patterns. Think about offering new kinds of benefits to meet the moment, including flexible schedules, reimbursement for child care, extra sick leave, work-from-home options and home office setups. This might be a good time to upgrade outdated technology in the workplace.
Small-business recruiting strategies may also play a role in your business planning for the new year. Many companies downsized during the past year and, as business recovers, will need to rehire. This is a good time to think about the structure of your company, the roles you need filled and the cost of hiring. Are there roles you don’t need any more? Are there roles you could combine? What about bringing on new kinds of expertise? Smart business technologies may enable new ways of working and add to your talent pool many new candidates who might not have been available to you even a year ago.
In business planning for the new year, 2020 has reminded us that there are no guarantees. The future can change in an instant, with no warning. But that doesn’t mean you shouldn’t set goals and do the work for a strategic business plan. The key is to set reasonable, thought-through goals that you can take practical steps toward achieving. And stay ready to adjust as fast as possible if the situation changes.
Planning is time-consuming and takes hard work, but you can do it if you start early enough and take it step by step. It’ll pay off by keeping you on track toward achieving your business goals, and you’ll be better able to respond to shifting situations. Uncertainty brings stress. But change can also bring opportunity — for those who are ready.
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