The year 2020 threw businesses of all sizes and industries a major curveball. Whatever their plans were for the year, business owners had to upend almost everything to deal with the fallout of the COVID-19 pandemic and widespread government-mandated shutdowns. Under normal circumstances, businesses should be reviewing and revising their business plans every year, SCORE mentor Steve Moser said in a webinar, but it’s especially important for 2021.
“This might be a good time for people to take a look and see what's changed, and what might require something to be done differently,” says Moser. “So what has changed over the last year? Did something change in your target market? What do you have now that you didn't have before?”
Here are some key facets that businesses should assess and map out for the new year.
One of the first things you should analyze is what has changed for your business in the past year—and given how COVID-19 has forced many businesses to pivot, there could be a lot to unpack.
Moser states that COVID-related legal regulations are one of the key changes businesses should be aware of. “For example, bars and restaurants closing at 10 o'clock at night, when they used to be able to be open until 2 a.m.—a considerable amount of dollars could be spent in those extra hours,” he says. “So legal regulations make a big difference in terms of what you can and cannot do, and you have to make some choices.”
Moser adds, “This year, like I said, has been a rather critical year for thinking about technological changes.” That could mean adapting your business’s products and services to the latest technological advances, shifting to an e-commerce model, or implementing new contactless payment methods to minimize touch points and prevent the spread of COVID-19. Whatever it is, 2020 has shown that technology can help small businesses survive and even thrive in a pandemic.
Another thing to note is whether your business’s core competencies have changed. Whether that was because you lost an employee who performed a key task, or because you’ve shifted your business model to focus on a new product, Moser says it’s important to have a clear grasp on your business’s new strengths and weaknesses by conducting a SWOT analysis.
In 2021, the number one thing businesses need to be is nimble, says Wai-Chun Li, senior vice president of small business lending at East West Bank.
“That means they need to keep their eyes open, because the situation is very fluid,” he says. “They need to watch out and adapt to the new environment almost every day.”
Li uses bars and restaurants as an example. State and local government mandates can change at a moment’s notice, depending on the severity of COVID-19 infections in the area. A few months ago restaurants could open for outdoor dining and limited indoor dining in some places, but now cities like Los Angeles that have high infection rates and low ICU capacity have once again required restaurants to return to a takeout-only model.
“Some of my customers joined [delivery apps]…but then [the apps] charge on the delivery,” says Li. “They have to make very quick changes to survive. They’ve got to be nimble.”
Although 2020 is past, the United States is still experiencing the widespread effects of the COVID-19 pandemic. Many businesses have experienced declines in revenue and have had to apply for loans from the Paycheck Protection Program or Economic Injury Disaster Loan program to stay afloat.
“Another suggestion I have for businesses is to save as much cash as possible,” says Li. Generally, businesses should have enough cash on hand for three to six months’ worth of expenses without any cash inflow. However, given the unpredictability of the situation, a business should save more cash if possible to have that additional buffer.
Of course, businesses can’t cut costs on all aspects of their business, which could end up hurting more than helping. However, SCORE mentor Marlan Helgeson says that business owners still need to calculate how much they are spending and on what.
“Know how much you can spend for advertising, know what your website is costing you, and so on,” says Helgeson. “And the pricing, of course, of your product is very important because you’re set in the expenses that you have. Also the amount of income that you need is how you want to price your products.”
The most important thing to developing your marketing plan is knowing who your target customers are. “You have to research that and list the key competitors out there,” says Helgeson. “Because that's very important in positioning: [knowing] who your customers are, what prices they want to pay and what the quality of your product is.”
For some businesses, that could mean focusing more intently on a core subset of your target demographic as a way to cut down on costs while still earning much-needed revenue. For others, that could mean expanding your target regions to help make up for lost foot traffic and in-person sales.
Leveraging digital platforms will also be key, since consumers have largely shifted online in the past year. Moser recommends Google My Business, which is a free tool that allows customers to easily find your business online, but other online marketplace platforms like eBay or Etsy can also add new avenues for selling your products and services to a wider audience.
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