This is the fourteenth edition of my New Regular series devoted to helping small business owners have the maximum opportunity to open their businesses on January 1, 2021. Normal was caught stalking Dr. Fauci and arrested for not wearing a mask.
Every Main Street business owner had a business plan when they opened for business in January 2020, from a fancy, multi-page model, to thoughts printed on the owner’s brain. Regardless, these two operators have one thing in common: They’re both going to need a new one. A post-pandemic, New Regular business plan. Stay with me – you’ll thank me later.
Emerging out of a government-mandated shutdown, we’re finding a marketplace shrouded in a fog of uncertainty. But the good news is the fog will lift once you find answers to three questions:
- What do customers want right now?
- How has the competitive landscape changed?
- How far out of alignment is my business from these two?
These aren’t new questions, but in the span of several weeks, the answers are. They’ve morphed from a little different to unrecognizable since February, and here’s the foggy part: they’re still changing.
Would you like some fog-clearing clarity? Getting what’s in your head out and looking back at you from a screen or paper will produce powerful illumination. And there’s no better source for such marketplace sunlight than a business plan. The most successful small business CEOs create and operate with a real plan they can refer to regularly. Let’s get you on that track.
It isn’t complicated. A business plan is an idea for a venture that develops from facts and figures structured and applied into a forecast of what you intend to do, how you intend to do it, and how you project those moving parts will successfully coalesce in the future.
The first part of your plan is about the present: What do you know? What do you have? Who’s on your team? What do you need? How are you going to get it? You already know the first three, and the last two will come from post-pandemic research. The answers to these questions are the narrative part of your plan. Write it all down.
After the words, focus on the future. And in the New Regular, the future we care about spans from tomorrow to the end of 2021. Here’s a handy way to think about it: The future is in the financials. And you can achieve more fog-clearing clarity with these two financial elements: assumptions and projections, with the former driving the latter.
Assumptions: These are the building blocks of the financial section of your plan. They represent the real numbers you know, like the rent, and those you don’t yet know, like future revenue. Combining experience with post-pandemic research, take your best shot at determining financial assumptions: How much can you sell (revenue)? How much it will cost to produce sales (cost of goods sold)? How much will it cost to operate (expenses)? How much will be left over (profit/loss)? In an electronic spreadsheet, populate a single cash flow column – like a line-item budget – with your assumptions.
Projections: Then projecting your budget assumptions to the right for 12 columns (months). This powerful and dynamic spreadsheet will become your business plan dashboard, full of gauges that recalculate as you update assumptions based on what you need, what you learn, and ultimately, what happened.
Once you get addicted to your spreadsheet – as I have been for decades – you’ll manage your business with it like a carpenter uses a hammer and nails. With every passing cycle (day, week, month, year), you’ll replace assumptions with real numbers and re-project into the next cycle. As Tim Berry (galactic guru of business planning) says, “Plan vs actual.”
To help you get comfortable with forecasting, remember this: assumptions are often wrong, and projections are always wrong. But the more you work with them, the less wrong they will be.
Arguably, the most important product of your spreadsheet is projecting cash flow – positive and negative – months in advance. A negative cash surprise is more dangerous than a governor with a coronavirus shutdown mandate. Surprises are for birthdays – not cash.
Now that you’re oriented around the planning steps, reset your 2019 assumptions with answers to those first New Regular questions:
- What do customers want – right now? This answer will drive your revenue line, but perhaps more than ever, it will influence operating expenses. Expect customer service – especially your technology – to become a bigger expense/investment than before.
- How has the competitive landscape changed? Post-pandemic, things here are different. In any other time, we’d want to make the competition worry about you. But the Big Boxes – especially Big Tech – have gained an advantage that’s heavily influencing customer expectations. Plus, your New Regular reality may include the absence of some former competitors.
- How far out of alignment is my business in the post-pandemic marketplace? This is your prime planning focus. Well-researched answers to the first two questions will reveal this answer on your spreadsheet.
Space prevents more business planning detail. But these two – the words and the numbers – are the foundation. Our purpose here is to get you started. So, get started.
Here are two outstanding business planning resources: Tim Berry’s Bplans.com and Crowdspring.com/how-to-write-a-business-plan. You’re welcome.
Write this on a rock … Without a New Regular plan, your post-pandemic business is driving down a one-way street, the wrong way, at midnight, in a rainstorm, with no lights, and it isn’t buckled.