Envisaging the future is a difficult task for most business owners given the current uncertain conditions of the world economies. Nevertheless, it is now more than ever a challenge to draft a plan for the upcoming year with lessons from the past year. These tips below apply to not just franchises but all kinds of business establishments. In other words, they share some insights on how to prepare your business for an uncertain 2021.
1.Shape of our economic recovery
Different businesses have experienced extreme scenarios of success and challenges. For instance, there was a boom with more than a 50% increase in sales for the DIY industry worldwide. While the fitness centers that were shut during the lockdown were struggling to reopen with full functionality. Irrespective of the type of business it is crucial to try and plan for 2021. Four possible revenue scenarios can be based on the shape of economic recovery.
- V-shaped: This is the most desirable scenario for next year – our unprecedented economic collapse followed by a consistent growth pattern back to normalcy by mid-year.
- U-shaped: This shape depicts an economic collapse that is extended over a long period followed by a gradual recovery late in 2021.
- W-shaped: The W shape represents multiple rounds of Covid-19 infections causing additional shutdowns and reopenings for many sectors.
- L-shaped: This represents an economic collapse that simply never recovers, and commerce, as we know it today, is changed fundamentally.
2. Flexible budgeting for 2021
If you have not already created, start planning and creating a dynamic budgeting system. You could do this by beginning with sales predictions on a monthly basis. Maintain an excel that allows you to add the actual figures every month so that it will recalculate and adjust its predictions based on reality.
3. Predicting 2021 sales
If you are struggling to estimate the sales for 2021, be assured there are plenty of businesses floating in the same boat. If you have has an exceptionally good 2020 year for sales, you may wish to calculate 10% higher from there. Or some may like to add 20% from the base year 2019. Irrespective of the year, the real figures will vary on changing consumer buying behaviors. Ask yourself how will that affect your sales? How much must you invest in product changes, new marketing, or technology to adapt to the new behaviors? It has now become crucial to track your sales trends and what drives them. Be innovative, creative and bold.
4. What goes into the budget?
Adjustable sales goals and practical expense plans are key while planning on the budget for 2021. In other words, be proactive and focus on improving the gross margin for 2021. Practical expense plans help you stay grounded on your business requirements. Such as, will you work with your current staff or will you need to hire new staff? In that case, will there be additional training expenses? What are the other variable costs that might fluctuate based on sales forecast and business recovery? Be vigilant to cut down on any redundant expenses and invest in innovation and recreate strategies for better sales.
Click here for more tips on basic accounting know-how for a franchisee and how to grow your franchise during uncertainty?
5.Tips for better planning for 2021
- If sales are strong, drive profits now while you can and build cash reserves.
- Modify your products or services and your customer experience to align with customer buying behaviors.
- Keep personal and business expenses scalable.
- Keep your accounts receivable clean.
- Stay current with suppliers.
- Don’t use credit cards to finance your business.
- Pay attention to your balance sheet – don’t let debt get out of control.
- Cultivate an ongoing relationship with your banker.
- Monitor your flexible, dynamic budget and recalibrate your plans as your future unfolds.
With every new challenge comes an opportunity to learn and grow. Have an open mind and a practical outlook. But more importantly, remember that staying calm and eager can positively impact your ability to decide on what is best for you and your business in the long run.
Source: Franchsing.com
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