Why is a business plan important in 2021?

L Charles Accounting Limited

Right now, it’s ‘Business Unusual’ as businesses face restrictions during the pandemic and attempt to adapt to an unfamiliar environment.  This is why reiterating the importance of business planning should be at the forefront of our minds.

Most seem to think a Business Plan is just a document put together at the start of setting up your business and set aside once it is completed.  However, a Business Plan should be revisited continuously, and will change along with the new developments.

Check out our SEVEN Steps to successful business planning to ensure your business gives you the best running start in 2021: 

1. Highlight goals and actions
2. Close the disconnect
3. Prepare to re-invent
4. Set out your budget
5. Pin-point opportunities, vulnerabilities and critical challenges
6. Identify and manage possible risks
7. Pull everything together as a complete package

Highlight goals and actions

Setting out a new business plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you'll first need to decide what your goals and objectives in business are. As part of that, you'll assess the business you've chosen to start, or are already running, to see what the chances are that it will actually achieve those ends.  Finally, you'll take a look at common elements of most plans to get an idea of which ones you want to include and place actions against each goal.  Getting a firm handle on your businesses financial goals and even lifestyle goals is a big help in deciding how you'll plan your business.

Closing the disconnect – Revisit key questions like ‘Who are you targeting in this current climate?’ and ‘What services do they need?’

Firstly, understanding the current change in climate as a collective has a high importance in closing the disconnect in your business plan.  Convincing employees to make any real change in their strategic thinking is possible if directors and employers hold a collaborative front to support every sector of the business. Discuss any issues your members and colleagues are facing in the attempts of getting back to work and access ways/services you can offer to support everyone within the work place.  Once you feel you have an understanding of the difficult issues your members and colleagues deal with this should build the basis to identifying who your target audience has become.

Secondly, agree what your team consider to be the THREE main attitudes and obstacles of your clientele as they proceed through the pandemic. Using the resources your business has available, identify how you might influence each attitude/obstacle.  Write up your main points under each attitude.

Prepare to re-invent – This is your opportunity to set out the values that can help steer your business through times of trouble

Through these times of uncertainty, a strategic and collective response to the pandemic is necessary for success and for new plans to be confidently implemented throughout the entire workplace.  There are some business’ that will have set new values in the uproar of the economic changes but there is often a failure to implement them.

As a director it is pivotal that you provide staff input to what your new business values should be; monitor the effectiveness of these values and obtain staff support for effective workplace measures.

Set out your budget – both personal and business

Adapting your budget during the pandemic to account for the new normal. Use the FIVE tips below to get your business budget back on track after the coronavirus.

• Chances are, your financial income has probably changed drastically over the past month because your cash flow may be different to what it was pre coronavirus. Taking into account your current change in income and rework your business budget.
• Financial forecasting is the next stage to estimating your business’s future financial health by looking at past financial data and reports. This can help you estimate your business’s income, expenses, balance sheets, cashflow, profit and loss statements. This should prepare you better for potential future emergencies.
• Take some time to rebuild your business emergency fund as soon as possible so your business is prepared for the worst.
• There are a number of grants available to us during the pandemic to support struggling businesses during the pandemic. While some loans may not be as forgivable and you may have racked up some debt. To avoid being stuck in debt, prioritize paying off your debt as soon as possible.
• Line up your current financial goals to your current budget plan by clarifying how you can accomplish these goals after the current crisis.

Pin-point opportunities, vulnerabilities and critical challenges – For the way you run your business and how you manage your team

During the pandemic, start-ups have continued to play a critical role for economies. Some innovative young firms have reacted fast and flexibly to the pandemic, and have been critical in helping many countries shift towards fully digital work, education, and health services, and have provided innovations in medical goods and services.

Although, those with relatively limited financial resources are most at risk, but none are immune to the pandemic’s effects. Therefore, pinpointing vulnerabilities and critical challenges will help us respond actively to the crisis. After reviewing your new business budget, as a small business you may decide to temporarily close your business due to financial risks or operational restrictions being way to high.

However, the outbreak has also induced persistent changes in society, consumer habits and needs that could uncover valuable business opportunities if you actively anticipate these changes. For instance, demand for remote working, e-commerce, education and health services may be transformed.

Identify and manage possible risks

Identifying the risk; working out who might be affected; evaluating existing control measures and deciding if additional measures are needed; recording the assessment & monitoring and reviewing the application of the control measures and the assessment.

Some businesses depending on the employment sectors will face greater risks than others. Within each sector there will be additional risks, these may include:

• Failure to meet obligation - For example: If your job typically requires face-to-face interaction, then you may have found business has dried up. This is a time when your creativity and business nous is crucial.  Can you offer any additional or existing services remotely?
• Insufficient money to pay staff - Naturally, as business becomes harder, so does life for so many of us. If your margins are tight, you may find yourself struggling to keep up with the wage bill.  Help is available to you with government scheme like the ‘UK Government Coronavirus Job Retention Scheme’ to help employers and employees across the UK.
• Loss of business interest - As many have withdrawn into their homes in self-isolation, several operators have also gone into their shell as uncertainty reigns across the business world. Openness and transparency will be key.  Have honest conversations with your client base about what you can still offer, while also discovering whether or not they remain in a sound financial position to pay you for any services that remain in place during the pandemic.

As you and your team begin to identify the possible or current risks your business face. It may be helpful to remember these TWO keys words in order to decide how you plan to manage each risk:

1. Mitigation – action that needs to be taken to prevent future risks
2. Adaptation – action that needs to be taken to deal with the risks that already exists or is inevitable.

Pulling everything together as a complete package

 One of the most valuable uses of a business plan is to help you decide whether the venture you have your heart set on is likely to fulfil your dreams.  Many business ideas never make it past the planning stage because their logical and coherent planning process may reveal a lack of longevity within the business particularly during the pandemic.

Once you have completed all SEVEN steps to creating your business plan, this will help you outline your company's potential.  There are no wrong answers.  The objective is simply to help you decide how to put you on a sure path toward growing a sustainable business during this economic crisis.

If you would like to discuss our finance and accounting services in more details, please get in touch.  Once you are signed up with L CHARLES ACCOUNTING LIMITED you have direct access to our experts and FREE advice – this adds significant value to our fixed fee/ subscription service. Start Business Planning Today!

Letha Charles
Founder & Director
L Charles Accounting Limited