“You can always amend a big plan, but you can never expand a little one. I don’t believe in little plans. I believe in plans big enough to meet a situation which we can’t possibly foresee now.”
― Harry S. Truman, former U.S. President.
It’s an interesting quote taken from the President of the United States more than 65 years ago. Although he was speaking during the height of World War II, it still has resonance and meaning today. A year ago, as business leaders planned for 2020, who knew that a little-known outbreak in Wuhan, China would have the devastating economic impact it continues to have on the United States and other countries. Most, if not all, companies had not planned big enough or well enough to understand the ramifications a pandemic would cause on their business and how they would need to quickly pivot in order to adapt to work at home orders.
As 2020 draws to a close it is an opportune time to start looking forward and finalizing business planning for 2021, while thinking about those plans that were developed last year. Even in the best of economic times business strategizing can be more of an art than a science. In a year that was dominated not only by a global pandemic, but also a highly contested presidential election, and an unpredictable economy, forecasting and planning becomes even more difficult, and yet significantly more important than previous years.
The pandemic has changed everything. Companies that had planned for and laid out the foundations of strategic partnerships were ready to respond with digital solutions to this unforeseen situation. Those that hadn’t are scrambling to catch up and, unfortunately in some cases, have failed. As we check in with our clients to assist them with planning and forecasting, we are seeing some interesting trends and recommendations on how to better plan for next year, and we provide the following for your consideration:
1. Start your process back at the beginning when you decided to go into business on your own. Many strategic planning efforts are “save as” versions of previous years. You may calculate a nominal change in the percentage of growth or perhaps forecasting for a flat or decreased year, but your activities remain the same. It’s not enough to move your financial targets without reconsidering the world and your new place in it. For example, consider whether your
industry or category is growing, treading water, shrinking, or potentially becoming entirely obsolete. If your answers are the latter options, you may need to reinvent your business. Who are your key targets and customers? Not the ones that bought from you in 2019, but rather the ones that will be spending money in 2021. Are they increasing or decreasing their spending on what you do? Are they increasing their spending in other product categories or support that you could offer but haven’t been promoting?
2. Trust but verify your financial model. Many companies are awaiting a signal that says the economy is finally and fully back to operating like it used to. Unfortunately, we don’t believe such a signal will happen any time soon, if ever. As a result, you should consider forecasting for both the short-term and the long-term. Model for the long-term but measure your progress against it frequently. This year many companies are taking a fresh look at their fixed and variable costs. Fix the cost around the things you have strong confidence in. Leverage partnerships and employ creativity in areas where variable costs can keep you agile as you rebuild your balance sheet.
3. Focus on what you can do. All the rules and regulations have told you what your business can’t do. What you need to do now is look solely at what you can do. For example, when restaurants were told they couldn’t serve customers indoors, they transitioned to delivery, takeout and large outdoor patios. No matter what type of business you operate, this is the mindset to develop and use for your 2021 business strategy.
4. Use the time to make process improvements. Look at 2021 as an opportunity to improve. For example, you may have been putting off a complete digital transformation. If that’s the case for your company, now is the ideal time for transforming from a manual and paper-based processes to a digital format.
5. Cross-selling potential. Are your best clients and targets engaging with your highest value offerings? Have you reconfigured your value proposition messaging to align with the above? Have you managed digital transformation to deliver the content and engagement plan that gets you in front of these accounts in the right places and times? Are you resourced to service the highest value business? Are your competitors in a better or worse position? Does this change how you can approach your best accounts? Your forecast should follow the above assessment of current account potential and future accounts in your target markets.
6. Provide valuable resources for customers. Focus your business strategy for 2021 on your customers and customer-facing actions, such as adding value to what you deliver them, and the ways in which those actions assist with your revenue objectives. On the sales side, providing more options for financial assistance could help new customers make their purchases. Examples include layaway, structured payment plan services and other payment options that address smaller cash flows and changes in consumer confidence.
7. Revisit your marketing strategy. Once you define what you can do — even if it requires an adjustment in the business environment — you can then build quantitative goals and a set of tactics for achieving them.
8. Develop a multi-plan and contingency approach. With uncertainty anticipated to continue in 2021, it’s good to have one or more backup plans for your business. Lay out potential contingencies that you may face in the coming year and use this time to craft strategic responses. These strategic plans can address different scenarios like ongoing health concerns, reopening at a slower pace, continued openings and closings, remote and on-demand environments, and full reopening. Build out each of these plans, using the experience of 2020 to help develop key tactics. Many of these tactics may have already proven effective this year or they may be ones you are still testing.
By following these guidelines, you can continue to position your company for the future and plan to overcome whatever may arise in 2021 that was unforeseeable today.