The COVID-19 pandemic already has had an impact on small and midsize businesses that has lasted for months and could reshape how many businesses plan for their futures. In a June U.S. Chamber of Commerce report, 82 percent of these entrepreneurs said they were worried about the impact of the pandemic on their businesses. And 55 percent believe it will be six months to a year before business returns to normal.
The pandemic and recession have forced many businesses to reinvent themselves virtually overnight. Some have added new products and services to generate more revenue. Businesses that were able to stay open had to institute changes in operations, practices and policies to keep customers and employees safe. Because these changes affect how the businesses operate, the costs they incur and other factors, now is a good time for small business owners (SBOs) to revisit their business plans.
"A business plan is not static,” says Cindy Hannafey, a managing director for UHY, LLP, a New York City-based accounting and business consulting firm. “It's that aspirational statement of where you want your company to go in the future.”
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As you review your own plan in light of the changes this year has brought, here are four areas that may merit specific focus.
1. Define your purpose
Toward the front of the business plan, companies often use mission, vision and values statements to state their reason for being. McKinsey research released in June found that customers actually do look closely at a company's values, and that information affects their buying choices. For example, 1 in 4 consumers said that a company's treatment of its employees plays an important role in their purchasing decisions.
Hannafey says it's time to think about what matters to your company and ensure that your business is reflecting those values. For companies to clearly assess their best path to move forward, entrepreneurs are going to have to “really understand your vision, your strategy and your initiatives throughout the organization. When I talk about vision, I am talking about your why. ‘Why am I in business? What is my inspiration?'” she says. Review those priorities and weave them throughout the organization's business practices.
2. Check on your customers
Chances are your customers have been affected by the COVID-19 pandemic, too. Now is the time to do your homework about the widespread changes occurring in homes and businesses. More than half of U.S. consumers have cut their spending, according to Gallup. And half of CFOs in a recent PwC survey said they were cutting operational spending in their businesses.
It's time to check in with customers and determine what their needs and plans are — and how those will affect your business, says Charleston, South Carolina-based Peter D. Lucash, professor of the practice at Northeastern University's College of Professional Studies. “What's going on with them? Get on the phone with your customers, your key customers in particular,” he says. Find out what they need and what their worries are. Think about how your business can adapt to serve those needs.
In addition, find out the type of information they want from you and the format in which they want to receive it. Do they want regular updates by email about promotions and new products? Would they prefer regular calls or an up-to-date social media channel or blog where they can read about what's happening? This can help you refine your communications strategy, as well, he says.
3. Adjust your sales or service strategy
The U.S. Chamber report also found that 8 in 10 small and midsize businesses plan to make safety-related changes, ranging from more disinfecting to implementing social distancing requirements in their businesses. Your firm also may have increased remote work dramatically or shifted to videoconferencing to provide information or services. Or stay-at-home orders may have significantly increased online transactions, which require shipping, delivery or curbside pickup options.
As you weigh which changes to make to your operations, consider that some choices may open doors to new opportunities, says Vikram Mansharamani, a Lexington, Massachusetts, business advisor and author of Think for Yourself: Restoring Common Sense in an Age of Experts and Artificial Intelligence. “Your addressable market could be bigger, not smaller,” he says. For example, if your art instruction business began offering online classes, you could potentially have customers from around the world versus your local market. Similarly, an e-commerce business could open significant revenue streams. However, those changes do have costs and you'll also need to adjust accordingly. The key is to look at the potential to grow those new segments as you determine if they'll be a part of your future offerings.
4. Keep an eye on financial performance
One of the biggest questions small businesses are facing right now is the impact the pandemic is having on their financial performance. This is a situation where scenario planning, in which you consider a number of possibilities, can be helpful, Mansharamani says. “As we think about the future, it's important to lay out scenarios because the truth is, we don't know what's going to happen,” he says.
So, as you work on projecting sales, expenses and profit, consider what will happen if you meet your goals, if you face your worst-case scenario and/or if you land somewhere in between, he says. “And in each of those scenarios, you may come up with a different plan of action, or you may see overlap in the plans of action,” he says. When you create these models, you can begin to think about how your business will need to adapt in each situation.
If the pandemic is affecting your business, it's time to take stock and use your company's resourcefulness and insight to look toward the future. By focusing on your values, customers and operational factors, you can help protect your company and determine the best steps to take to maximize financial performance during recovery.