You may have your eyes on the trends and follow leading economists. But a finger on the pulse might not necessarily give you the answers you’re looking to get.
And that includes the state of the economy right now.
Given the panic that the unexpected coronavirus pandemic continues to bring,something should be clear to you by now. The serious consequences of a blackswan event can be difficult to predict.
So, how do you plan for these unprecedented occurrences – especially when you can’t even predict when they’ll happen? You do it with a strategic plan, involving flawless accounting and bookkeeping.
Strategic Plan vs. Business Plan
Your garden variety business plan does share some characteristics with a strategic plan. For one, they both clarify the state of your business now and in the future. They also list the goals that will get you to that future. Likewise, both require updating so you can keep up with what’s going on. But there is a colossal difference between the two plans. More thoughtfulness and consideration of the what if’s are missing from vanilla business plans. Andthat’s why you need a strategic plan.
The said plan will involve having schemes for both the good and the not-soawesome. Let’s use a Superbowl analogy for the situations:
The Good Times
Good economy means it is time that you went on the offensive. Here are someactions you can take:
Revenues
When this is the norm, ascertain that profits keep pace through accuratebookkeeping. Sure, more money may be coming in than before. However, theprices of the good you buy and the salaries you pay are on the up too.
Therefore, put a plan in place that you can act on with more money available toyou. If you know your accounting, you’ll know when you can take on moreprojects, pay down debts, or expand to a new location.Staff
A growing business also requires a larger staff. The latter also helps in maintainingthe quality of customer service. Hiring would mean additional costs, such aswages, employment taxes, and benefits. The better at accounting you are for theexpenses in the past, the easier it will be to find the money to spend in the future.
Accurate bookkeeping will show you how much increased compensation toexisting employees you can make. Think in terms of fringe benefits rather thanwages – employment taxes don’t apply to the former.
Marketing
Keep growing with increased marketing efforts. Again, accounting will show whatyou have been spending. Use it to plan for the next quarter.
And the Bad
Souring economies require money and financial wherewithal to keep businessesafloat. Here are some measures you can take:
Cash Flow
Your business can bypass the issue of insufficient revenue with a thoughtfullycreated financial backstop in place.
However, it is equally essential that you monitor expenses with accuratebookkeeping to ensure they don’t get out of hand. Regular reviews of expenses, such as before the renewal of annual insurance policies, should be a part of your strategic plan. Confirm if you need that insurance or a subscription before spending on it.
Staff
Layoffs can be traumatic for employees’ families and the employer! Prepare forthis situation with two things. Firstly, create that financial backstop – but knowthat this is a short-term solution. Secondly, keep employees busy with skillimprovement trainings or retraining for new positions when business is slow.
Marketing
Since tough times are when you need marketing the most, think ahead. Use low-cost strategies to do the heavy lifting. Those employees you were going toretrain? Direct some of them towards learning how to run social media campaigns– a great low-cost marketing tool.
Resource
According to the SBA’s list on failed strategic plans, avoid these mistakes: An ill-defined strategy Lack of detail, including who does what and when Clearly stated, quantifiable goals Input from all key players missing
Accounting and bookkeeping – when done right – can breathe a second life intostruggling businesses. But don’t let it come that close. Contact us!
