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 black
swan 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. And
that’s why you need a strategic plan.
The said plan will involve having schemes for both the good and the not-so
awesome. 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 some
actions you can take:
When this is the norm, ascertain that profits keep pace through accurate
bookkeeping. Sure, more money may be coming in than before. However, the
prices 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 to
you. If you know your accounting, you’ll know when you can take on more
projects, pay down debts, or expand to a new location.
A growing business also requires a larger staff. The latter also helps in maintaining
the quality of customer service. Hiring would mean additional costs, such as
wages, employment taxes, and benefits. The better at accounting you are for the
expenses 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 to
existing employees you can make. Think in terms of fringe benefits rather than
wages – employment taxes don’t apply to the former.
Keep growing with increased marketing efforts. Again, accounting will show what
you have been spending. Use it to plan for the next quarter.
And the Bad
Souring economies require money and financial wherewithal to keep businesses
afloat. Here are some measures you can take:
Your business can bypass the issue of insufficient revenue with a thoughtfully
created financial backstop in place.
However, it is equally essential that you monitor expenses with accurate
bookkeeping 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.
Layoffs can be traumatic for employees’ families and the employer! Prepare for
this situation with two things. Firstly, create that financial backstop – but know
that this is a short-term solution. Secondly, keep employees busy with skill
improvement trainings or retraining for new positions when business is slow.
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 to
retrain? Direct some of them towards learning how to run social media campaigns
– a great low-cost marketing tool.
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 into
struggling businesses. But don’t let it come that close. Contact us!