2021: Six Tips on Planning for the Unknown

In the fourth quarter of every year, business leaders start planning and forecasting for the upcoming year. They take into consideration historical data (things like year-to-date revenue, cost of goods, market trends, etc) and start to make lofty goals and design a road map to gain market share and advance their mission. But what do you do when the current year has been like no other? And, what do you do when the upcoming year is already riddled with uncertainty?

By executing these few steps, you’ll be able to take some of the guesswork out of 2021 planning and be confident you are ready for whatever gets thrown your way!

1. Refer back to history

Take a deep breath and dig into your historical data! Hopefully you have been analyzing your month-over-month income and expenses. (If not, do it now!) Go back 36 months, if possible. Compare the same month of multiple years. Look at month-over-month growth percentages. Any quarterly data that stands out? How about looking at 12 month rolling data (such as June 2019 to June 2020)? Are you noticing any trends? Do you have stronger months? How about 2020? Were you hit hard by the pandemic or was your business thriving?

Write down all the trends that have material significance. What story is it trying to tell you? Should you have been more aggressive some months in your marketing efforts? Is your net profit where you want it to be? Did you wish you had higher margins for the downturn?

One thing is for sure, data always tells a story and within that data you can build a compiling journey for the future. No, it’s not going to feel like other years - but maybe it’s not supposed to.

2. Create your revenue forecast and budget

Now armed with your data and trends, start building out what next year could look like. We know a few things to be certain, we are not going back to pre-2020 living anytime soon. And we very well could be in for another shutdown (some states are already moving in that direction). 

Conservatively look at the first quarter. Are you in a business that is benefiting from these changes? Could another shutdown hurt you? 

I always recommend organizations forecast revenue conservatively during uncertain times. Why? Well, once you have your revenue forecast you start adding in cost of goods and expenses. Nothing is worse for your business than over estimating revenue and not having enough to pay for the things needed to run it. And while we are talking expenses, contrary to popular belief, I think you should be a little aggressive. Why? Well, when things don’t plan out like you expected, you have the margin to remove things. The key to long term success is to have realistic expectations and forecasts. 

3. Draft a contingency plan

I know it’s not sexy to talk about, but you’ll thank me later — I promise. Nothing helps guarantee success more than a plan. It’s cliché, I know, but you can’t get where you want to go without one!

Think of it as a different version of a business continuity plan. What would you do if you lost the top 10% of your clients? How would you bring in new business if you can’t network in-person? Or better yet, what is your plan B when you don’t have any work for your employees?

Get prepared! Sit down by yourself or with your leadership team and draft a document that gives guidelines on how you will proceed when you need to pivot. Not only will it give you and your leaders peace of mind, but it also shows your team that you care about them and your clients. That you are a visionary, strategic and proactive leader.  

4. Build cash reserves and limit debt

It’s hard to cut expenses and reduce margins when money is tight, especially when it’s a debt collector who doesn’t take no for an answer. It’s even harder when you don’t have enough cash reserves to keep the lights on.

Remember our grandparents that lived through the depression. They were frugal and wise about spending. They knew that anything could happen, and they wanted to be prepared. That’s exactly what I’m asking of you. Start saving now and work aggressively to pay down debt. You may need extra funds to make payroll, launch a new service or product or give refunds. The landscape of business is changing. Be ready!

5. Grow your social media presence

Social media is still in its infancy. There is a lot to be learned and a lot of “real estate” to be had. Remote is here to stay! And so is the internet of things. Whether the pandemic continues to slow the economy or a possible vaccine helps resuscitate it, social media will make all the difference.

I encourage you today to grab a spot on Facebook, Instagram, LinkedIn, YouTube and maybe even TikTok. Find the right platform where your ideal client hangs out. Become a part of their day by delivering content they care about. Be relevant and compelling. Be authentic and offer value. Your clients want to know who “you” are!

The companies that will thrive in the next few years are ones that embrace technology and use it to their advantage... no matter the industry. 

6. Review your contracts and agreements (and maybe insurance)

Another lesson from 2020 is that contract language will prevail. Almost every business was scrambling to review contract details and legalese. What was the cancellation policy? Was COVID an act of God? What was the termination notification period?

Not only were you scrambling to make sense of things, but so were your clients. Now is a great time to review your contracts, agreements and insurance policies. Next, if you have contracts or agreements as part of your business, make sure you are protected. 2021 is a brand new year and a great time to do a deep dive into where you are contractually obligated. You might need options.

With the unknowns of 2021, let us not allow "the tail to wag the dog". Plan, prepare, and pursue the future with peace and confidence.