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According to a recent poll, 50% of company leaders believe their operations will not stabilize from the COVID-19 crisis before the next planning process. The global pandemic has placed a strain on all businesses over the last few months. Not only has it affected the current state of a business’s financials, but it also affects how businesses can plan for the future. So, how can you begin to plan if you cannot predict what is going to happen next? Has your planning process vanished since COVID?
Here are a few tips:
First, as you begin to plan and budget for next year, you don’t have to look at it in a pre-COVID/ post-COVID lense. Utilizing the pre-COVID data will likely result in inaccurate projections. Reconsider the lense you are looking through and then begin to plan.
Review the processes and procedures that will be your high impact drivers. Identifying these drivers will help you identify the actions you need to take to increase your profitability. How do you identify these drivers? Cash flow forecasting.
Forecasting your cash flow helps you to get a clear picture of your cash runway. It also helps you identify where you might have future liquidity issues. When you create an organized cash flow forecast, you are able to test best-case scenarios, worst-case scenarios, and likely scenarios. When you manipulate the forecast to plan for these scenarios, you can identify places you are able to cut costs, where you need to invest more, etc.
With all of the uncertainty surrounding the effects of COVID-19, it may be a good idea to begin forecasting and planning only a few months at a time. These forecasts will help to inform better decision-making regarding the evolving demand.
You should also begin to assess your target market. What are your consumers looking for post-COVID? In order to ensure the future success of your business, you must understand what your customers value. When you understand your customer on a personal level, understanding their words, thoughts, actions, and needs, help a business provide value and create loyal customers.
As you continue to navigate this uncertainty, the best thing you can do for your business is to begin planning now. Don’t let your planning process fall by the wayside as you work to survive during this tough time. It is likely your planning process will be what helps you thrive through these next few months.
Need help understanding and planning for the future of your business? Schedule time with one of our specialists today!
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
This post contains trusted sources. All references are hyperlinked at the end of the article to take readers directly to the source.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
