Set yourself up for 2021 with these steps
Hard to believe it, but we're now in the 4th quarter. What are you going to do with the last three months of the year?
We know the landscape has changed drastically since January, and we also know that the economic indicators and waning stimulus programs heading into 2021 will lead to another tough year ahead. The businesses that took immediate action fared better than others. Still, some industries have been devastated and are in the process of reinventing themselves.
When we started the year, no one could have known the impact the pandemic would have on our businesses. The New Year plans promised a year full of growth and new opportunities. Yet, halfway through the first quarter, we were all taking a torch to those plans.
Budgets were scrapped, and new forecasts were put in place. P&Ls were scrutinized, and capital expenditures were put on hold. Workforces were reduced, and a boatload of stimulus plans were rolled out.
Yet, the one underlying theme, no matter how your business was impacted, is that you’ve been taking constructive action. Now, as we enter the fourth quarter, you have more opportunities to set your business up for success in 2021.
Here’s how you can make the most of the last three months of the year:
1.Get a true financial picture of where you stand today. If you've cut back on your accounting department or let them get lax in the timeliness of their reporting, have them update the books ASAP.
2. Do some post-mortem analysis. For instance, if you aren't regularly tracking product or customer profitability, a few post-mortem analyses will show you where you are making the most money.
3. Look ahead and put pen to paper. You probably have a running financial forecast, but if you don't, there is no way you should be heading into 2021 without some financial model in place. Furthermore, given the many uncertainties we now live with, you need to make sure you’ll be able to easily update or rework your forecast to adapt to changing circumstances.
4. Hire a CFO. Even if you have a strong handle on your numbers, or if you tend to measure the health of your business by the size of your bank balance, it makes sense to get some help, perhaps on a fractional basis. Why? Because a good CFO will be as forward-looking as you are, acting as a great sounding board who can also run the numbers on any ideas you come up with.
5. Know thy ROI. This means viewing every dollar spent as an investment. Will it drive new sales and efficiency, or will it protect your business in some other way? If not, look to reduce extraneous spending. We are, without a doubt, at the beginning of a long recession, which means that demand could be light, customers will pay later, and banks will scrutinize loans and covenants.
6. Call your CPA. Ideally, you are having discussions with your CPA throughout the year, but if not, it's time to give him or her a call to discuss tax planning for 2020. With business down (or up, if you are one of the fortunate few), and with all the federal stimulus money in play, you need to understand the tax liability for all those funds.
7. Give yourself some space. Many businesses have been in fire-fighting mode since March. If you haven't done it already, it's time to pause and allow yourself some space and grace for making it through this far. With this space, you can take a moment to evaluate your response: what went well, what didn't go so well, and what lessons have you learned in the last six months?
8. Blow up your business model (on paper of course). Spend a day or half a day with your leadership team to think completely outside the box. Break down your business into its various components, and try to imagine what you could do with each component. Are there different uses for your team's skills, your assets, or your niche?
9. Scan the new landscape for opportunities. Not all your competitors made it through these last six months. Can you pick up their talent, key customers, or assets at a competitive rate?
10. Take inventory. What assets, people, or staff do you have on hand? How might you utilize your existing resources in a new way? Are there ways to downsize even more?
In the end, you need to take these next three months and use them strategically to set yourself up for a strong 2021. We’re passionate about planning and positioning businesses for success, so if you need that sounding board, give us a call.