Small Business in COVID-19: Annual Business Planning
Here we are in June and COVID-19 is still with us in some form or other.
For many small businesses, we are still in or starting recovery mode. To use the war analogy, the wounds are still sore and we are wary.
As I engage with Teik Oh Dot Com’s members who are using our online products, a large proportion are still working from home, or have rostered their team into the office to keep numbers down. Things are still quiet and it is clear that “normality” is a long way away.
This sense of being quiet and watching to see what will happen can lead to a dead-end though!
Now, more than ever, it’s true that “if you do nothing, a very strange thing happens – nothing!”
So, despite business being quiet, despite our fears and worries making us psychologically frozen, despite not knowing what’s around the corner, we still need to plan ahead.
Here’s what you need to do.
First of all, you need to take stock of where you are right now.
Check your finances, and understand what your current cash flow will support in the near future.
Review your relationships and recent engagement with your customers. What are the trends? Are you picking up a new cohort while your previous customer demographics are not returning, or is your engagement with your target market still strong?
Review arrangements with your team. How many have moved on or are unlikely to return? What gaps may have to be filled and when should you start to look?
Get a big-picture understanding of your industry in the current situation. What is Government saying about opening up your type of business? What is the media saying about the public response? What do your industry associations say about prospects?
Then you need to do your usual, annual business plan.
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June or July is the normally ideal time to do this, as one financial year winds down, with all the trends and lessons learned, and a new one about to start with new projects and initiatives you would like to launch.
However, this year appears different.
The last few months does not represent “normal” trading conditions so you may worry about what lessons you can take into the future.
As for looking ahead, can you start new initiatives? Can you understand market conditions enough to plan ahead?
And as for your usual planning methodology, can you get your team together to workshop and discuss the plans?
In fact, despite these uncertainties and the current trading conditions, it is even more important that you prepare an annual business plan.
This is the time that you need to treat your business almost as a startup business. Remember, when you started, you had no trading history you could build next year’s plans on. Unless you had conducted significant research you would not have had a great understanding of how your sales would build up and when you needed extra resources.
In preparing your annual business plan this month, you should take the findings from your review of the situation and put them together into new, shorter-term goals about how to kick-start your business, plan for and bring in resources when you need them, identify and target new markets or new approaches to your existing market, predict working capital requirements, and schedule actions that will grow the business more slowly than normal.
Without doing this, you can only react, and if your competitors are ready they will steal the initiative from you.
Once your customers forget about you because a competitor was more able to service them when they needed it, you will never get them back.
How do you prepare your 2020/2021 Annual Business Plan under these circumstances?
I really don’t think it’s any different.
Once you know that it is imperative for you to plan ahead and be prepared, schedule your planning work, but with some tweaks caused by the circumstances.
Let’s go through your (revised) planning steps, based on the five steps of business planning.
Step 1 is to get ready.
Decide on who will be involved in your business planning this year.
If you are a sole trader family business, this may only be yourself, but you might also want to include your spouse, to give you a different view of the business you are building to provide ultimate benefits for your family. You may want to include your business mentor or your accountant.
In a larger small business with employees, you may want to include key team members or even the whole team so that everyone can participate and understand what you are aiming for as a goal.
However, this year, you will need to check with the participants ahead to make sure that if they are to attend remotely they are set up with a good internet connection and a web-conferencing tool like Zoom or Microsoft Teams. You should practice ahead of time to ensure you know how to operate the conferencing software, including sharing of screens and so on.
You can conduct your planning meeting either with a small number of people in a room connecting by web-conference to others in remote locations or have everyone online.
People actually find meeting virtually by web-conferencing software better for team discussions. Web-conferencing naturally allows people to focus rather than glance at phones and have side discussions. Web-conferencing forces people to speak in turn instead of shout over each other.
Just make sure that everyone has copies of the resources you are using, including any material that you are following, or worksheets that you are completing.
There are other issues you need to be prepared for and I deal with them in my business planning checklist called “A Roadmap From Stress To Success” that you can download for free (I’ll give you the link below).
Once you have organised your virtual workshop you can conduct it in the “usual” way, but with some slight variations on what you discuss.
The next three steps are what you do in the meeting.
Step 2 is to check where you want to go.
This is where you describe your vision so that it is clear what your final idea of your ideal business that you are building looks like.
There is a process you go through – considering your purpose, describing your ideal business, writing your vision statement, and defining what it means in actual day to day behaviours, systems and results. You can read about this process in my free business planning checklist called “A Roadmap From Stress To Success” that you can get below.
However, this year you should adapt this and create a more immediate picture – what do you want your business to look like at the end of this year?
Just shortening the timescale on your “ultimate” picture of an ideal business allows you to take into account the particular difficulties arising this year.
It is important you have the long-term goal in mind, but having that short-term goal allows you to plan details on how to organise your recovery period.
Step 3 is to consider where you are now.
Your initial review of your situation should help.
My downloadable business planning checklist takes you through the steps of describing your business and then conducting an analysis of strengths, weaknesses, opportunities and threats of various aspects of your business.
However this year, you also want to examine where you are right now as you recover.
In particular, what is the state of your finances and resources that you can rely on? What has happened to your customer base – helping you to decide what your marketing strategies need to be, to “get” new customers or to “regroup” old ones? What is happening to your type of business – should you pivot or focus on one product?
You will need to look at the present and unprecedented set of circumstances before you look ahead to the more “normal” picture that you will plan for because your actions are likely to be in two stages:
- Get trading up to speed;
- Then go back to aiming at where we wanted to go before all this happened!
Step 4 is to “bridge the gap” and work out how to go from “here” to “there”.
Take the time to identify the gaps between your vision and your current situation.
If your vision is to expand from your location to a national business but you don’t have enough funds – that’s a gap.
If your picture of your business at the end of the year is to service all the customers you used to service, but your current situation is that you have lost touch with several of those customers – that is your gap.
Naming those gaps can identify your goals.
Once you have identified the gaps and set goals, you can draw out the things you have to do to bridge those gaps – your strategies.
It is important this year to prioritise your strategies so that you initially focus on the very short-term strategies to recovery.
While it is right, and you should still have longer-term strategies, it is important this year to work on the critical actions you need to take to build up trading and sales. This can take some critical decisions like immediate marketing strategies, when you invest in bringing employees back, what operational procedures to change, and so on. Once you know what you have to do, you can budget your expenditure and investments accordingly.
Step 5 is to put it all together and implement it, with a monitoring and evaluation schedule in place.
It’s important to collate your logical thinking so that you can refer to the business plan as a “story” of what you want to do, what you start with, and how you will do it. This allows you to understand what needs to be done during the year, rather than having to go back and question why you made certain decisions.
It’s also important to schedule regular monitoring and evaluation reviews so that you can check the results of your actions.
My free business planning checklist called “A Roadmap From Stress To Success” provides the other standard tools to ensure that you implement the business plan successfully.
However, for this year, I advise that you need to focus on the actions you decide to take to get back to full trading. It is critical that your business plan for this year includes frequent reviews of the results of your recovery actions. Knowing what results you are getting from implementing your plan in this area will allow you to make quick and nimble changes. If something isn’t working, but you still need that result you aimed for as a goal, you need to try something else. You need to change what you are doing as soon as you know, not months afterwards.
Yes, you need your annual business plan now more than ever!
I wanted to reiterate before I finish that you need your annual business plan more than ever.
An analogy I usually give when I’m talking about a business plan is the one about going on holiday.
If you go on holiday, you decide where you want to go and what you want to do before you buy your ticket and pack your bags. Otherwise, you would arrive somewhere completely unknown and unprepared, wearing winter clothing in a tropical resort!
In this case, this year, I think the analogy is more one of an athlete getting injured.
Before the injury, the athlete will know exactly what training regime they need to undertake before the Olympic Games in two years’ time.
However, once they get injured, they will need a recovery stage before they return to normal training. Their planning will need to involve what they have to do in recovery, and then, with a shortened timescale to the Olympics, they need to adjust their “normal” training schedule.
How can they recover otherwise? How can they “get back on track” without a plan? They cannot seriously expect to get to the Olympics by deciding what to do as each day goes by!
It’s the same for your business. Even though you may not feel like it. Even though you may feel depressed about the setback to your business, now is the time to plan to get out of the slump!
You can download my free business planning checklist called “A Roadmap From Stress To Success” by clicking on this link here.
The checklist explains how a business plan gets your business organised, provides a work-through checklist as your business planning roadmap.
Now is the perfect time to focus on where you need to go and do your business plan!
Keep watching this space. In future blog posts, I am going to show you how you can prepare your business plan by following a step-by-step procedure.
See you soon!
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