How To Plan Through Business Uncertainty

Running a business is hard. The moment you think you’re sailing smoothly, the proverbial storm is just beyond the horizon. 2020 through 2021 was a year unlike any other, and seeing as you’re reading a planning article, we assume you’re weathering the storm well. The world is slowly returning to normal, and with it, your business. Developing a financial  and operational plan that allows for calculated growth without neglecting to consider the uncertainty ahead will make all the difference in regaining stability.

Before you can begin to plan, you’ll need to take inventory of where you’re at and determine how the past year has situated you for the next.

Slow Down & Take Inventory

Crisis control is messy. As you scrambled this past year to redefine business processes and reinvent the ordinary, much of your foundation was subject to erosion. Going back to the basics and parsing through your financials will grant you insights into how essential items are holding up. Here are a few examples of where you should be looking:

1. Balance Sheet: As the clearest indicator of overall business health, your balance sheet will offer a look into the current status and highlight what’s possible for the year ahead;
2. Income Statement (P&L): This profitability overview will give you a quick glimpse into how key areas, like revenues and expenses, have performed. You’ll be able to compare quarterly data and spot major trends over the past year;
3. Cash Flow Statement: Your cash balance will address current liquidity and explain if (and how) inflows and outflows have changed. Any significant increases or decreases on this statement will highlight low-hanging fruit for you to address.
   

Of course, there is more to your ‘business inventory’ than financials. Take some time to understand how your team is handling the transition, and ensure that you’ve done what you can to promote success in this ever-changing environment. Now that you’ve got a solid idea of where you are, it’s time to begin preparing for what’s ahead.

Preparing for Change

Invest in business growth or conserve cash? Cut staff or increase the workforce? You’re certainly not the only business owner asking these questions. With no indication that economic stability is on its way, it can be challenging to balance business growth with a suitable margin of safety. You’ll need to plan for uncertainty, knowing that norms and preferences have changed and become comfortable with flexibility. There are a few key areas you’ll want to look at when the planning phase begins:

1. Sales: How have your sales processes been impacted over the past year? Begin to consider changes in the way your consumers live, shop, and make decisions. Pulling from your profit and loss statement, assess how various products and services are performing and optimize where possible. You can also begin to ask whether it’s time to expand the team based on your (flexible) expectations of the year ahead, supported by your financials;
2. Marketing: You should be asking yourself how your current messaging aligns with the macro situation and determine whether you can better connect through the use of new channels, programs, and campaigns. Finding ways to invest in meaningful brand relationships will have an extended return, and you should be open to finding ways to incorporate it;
3. Operations: Global supply chains are as fragile as they’ve ever been. As a product company, you’ll want to review your current supplier contracts and logistics, looking for opportunities to create efficiencies and increase operating margins. If you’re a service provider, opportunities lie in the optimization of your team and offerings.
   

With this new idea of where you are and where you should be going, you’ll want to set up systems that allow for data collection and performance reviews. Investing in new initiatives, developing a larger team, and exploring new opportunities is great, but you’ll want to be sure that you’re only continuing the pursuit so long as they’re helping with business growth. That leads us now to our final section.

Monitoring Key Metrics

With new plans in place and an uncertainty ahead, you’ll want to collect as much data as possible on performance to inform decision making.

It should be enough to perform monthly, quarterly, and annual reviews of your Core Four Financial Statements  from a financial standpoint. You can accurately assess how new initiatives are impacting the health of the business, whether they’re offering new opportunities for growth or stability, and if re-alignment is required to keep moving in the right direction. If you’re uncomfortable performing these financial assessments on determining reactive and proactive solutions, our team can certainly offer a hand.

From an operational standpoint, it’s crucial to outline the purpose of the changes you’re making across sales, marketing, and operations, ensuring that they have the intended effect over time. We mentioned flexibility in the section prior, and the operational changes will be where that matters most. If new initiatives, processes, or approaches aren’t working as expected, your team needs to be receptive to this information and respond.

As a business of any size, operating through uncertainty is tough. Thankfully, a well-formulated, flexible plan will give you the stability you need to proceed with confidence. Get in touch with our team and learn more about we can help.