Forecasting For 2021—A Lesson Learned From 2020
The year 2020 has reminded us that we make plans; however, a certain outcome is never promised. In another sense, planning is a key part of business, so what’s an entrepreneur to do in times such as these?
What have you learned from 2020? Now is a good time to reflect on the many lessons learned throughout this year of growth, failure and opportunity. Some universal takeaways center around the reality that plans can get derailed.
Below, we discuss key lessons from 2020 and how these components can guide you in efforts to make plans for 2021.
1. Have Flexibility In Your Budget
Did the effects of Covid-19 push your budget off track? For many small business owners, the answer is yes.
Here are a few ways the pandemic may have impacted your budgetary projections:
· Temporary business shutdown
· Decrease in sales
· Employee absences due to illness/ perceived illness/ testing
· Business operations changes
· CDC health guidance compliance
For example, if you had to lay off employees to avoid debts, you likely understand how hard it’s been to keep income and expenses balanced in compliance with previous plans.
While planning for 2020, there was no way any of us could have predicted the many effects felt due to the pandemic. As a result, while planning for 2021, we are able to take this as a lesson to factor in a significant amount of flexibility into your budget.
So, for example, you might plan to have an additional 15% of your fixed expenses in surprise expenses.
It is always a good idea to error on the side of caution in relationship to predicting business expenses and income. It’s great to have goals, but don’t rely heavily on a budget that places reliance on reaching unrealistic goals. Further, when making predictions, pair historical data with economic considerations when setting your budget.
In addition to leaving room in your budget for unknown expenses, attempt to also place funds into an emergency fund for your business. That way, you have a cushion in event that your expenses are over-budget and your profits happen to be below projections.
2. Stay Current With News
Keeping up with the news not only helps in preparation for short-term goals, it also helps plan long-term efforts. For example, when news of the virus was first breaking in the U.S., most were altering their business models in figuring ways to work remotely, catering to the safety of consumers and maintaining a profitable business.
For most, national, state and local news stations were used to monitor the ever-changing situation. These sources allowed viewers to understand any events to be canceled, temporary business closings and precautionary measures to be taken. This information was easily obtained by staying current with such news platforms, ultimately providing education in regard to what was going on.
Here are some topics in which education was provided via various news outlets:
· Paycheck Protection Program (PPP)
· Tax deferments and extensions
· Expanded unemployment
· Tax credits for employers (and employees)
· Mandatory Covid-19 paid sick and family leave
Although at times the news could be quite overwhelming, there were many benefits to being aware. Such consequences may have included business owners missing out on the opportunity to take out a PPP loan or lacking information on what was to be provided to employees.
It is always important to stay up to date with what’s happening in your state and local community in 2021. It is a good idea to subscribe to get news alerts and designate time in your day to keep up with current happenings.
3. Be Prepared To Adapt
2020 was a clear reminder of arguably the most important business skill: adaptability. If you aren’t willing to try new things, you’ll have no way to keep up when times change … or perhaps when an event forces times to change.
For example, adding new products and offering new delivery methods, were a few ways in which 2020 forced businesses nationwide to get creative.
Some great ideas that businesses implemented to adapt to the pandemic included the following:
· Contact-free delivery
· New product lines (i.e. masks)
· Care packages
Adaptability helps build business resilience. No one truly knows what 2021, or years after, has in store. Again, we can’t fully prepare for any exact situation; however, there are always opportunities to get innovative.
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