Every year, small business owners and operators assess the wins and opportunities from the previous twelve months, looking for new ways to drive revenue, save money, leverage new innovations or technology, and provide their customers with the products and services they desire.
This year, that assessment comes with a major caveat: COVID-19.
2020 was unlike any year most small business leaders have ever seen. The pandemic had a negative impact on many businesses, and of the 54% of businesses surveyed by WSFS Bank in late 2020 that experienced growth, 68% modified their business models to make it happen.
Due to the business and economic environment, it’s even more crucial to set attainable financial goals. The key question: do you set those goals based on 2020 results or what the “new normal” is for your business?
While there is no universal answer, it’s important to consider specific impacts to your business, how you adapted and whether any changes you made are beneficial in 2021.
Here are a couple areas to focus on as you plan your business’s financial and strategic goals for 2021.
Set Your Plan, But Be Ready to Adjust It
If 2020 has taught us anything, it’s that being nimble and ready to pivot is no longer a best practice—it’s a must.
In addition to changing operating models, four in 10 of all businesses surveyed by WSFS also cited pre-planning as a key factor in their growth during the pandemic. They anticipated how restrictions could impact their business and shifted their financial and operational plans, including new products and distribution channels, to weather the new realities of how they could conduct business.
However, 45% of small businesses’ finances and cash flow were negatively impacted by the pandemic while only 40% said their bank helped them with business planning. Take the opportunity to leverage relationships with your bank and accountant—or establish new relationships—to help you navigate financial planning and goal setting on a regular basis.
Work with your banking and accounting partners to continuously review and adjust short-term goals and how they fit into your long-term strategic plan and projections, using Key Performance Indicators (KPIs) to measure success and opportunities, monitor performance and adjust your plan accordingly.
Continuously Review Financial Documents
Even if you’ve contracted the help of an accountant, it’s helpful to develop a deeper understanding of your business’s financial affairs.
One way to accomplish this is to become familiar with and regularly review the following reports on a monthly and quarterly basis.
- Historical Financial Performance Review
- Profit and Loss Statement (P&L)
- Balance Sheet
- Cash Flow Statement
It’s also important to assess the strengths and weaknesses of your team to ensure the right people are in the right roles for their own success and that of your business. Help them adjust to new ways of operating or interacting with customers.
Finally, continually monitor the needs of your customers and your competitive landscape or alternatives to your business offerings. Have a plan of strategic execution for 2021 supported by financial measurements of success and revisit your results monthly.
Continue to pivot to maximize success and lean into your relationships to learn what products and services customers are most in need of and shift your focus as needed to meet those needs while keeping your long-term strategy and financial goals on track.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.