At this time of year, I always encourage business owners to review the last year and reflect on their successes and areas to improve. Where possible, you should put systems and processes in place for resilience in the year ahead and have a ‘plan B’. I’m often asked “does my business need a plan B” and the answer is always “yes”! I’ll explain more in this blog as it’s not as doomy or difficult as it sounds.
So, my question is – will you take the time to review your business and do you have back-up plans? This doesn’t mean jacking it all in and starting again, but having back-up plans for specific areas of your business. And having a plan B isn’t being negative, it’s about having plans in place to aid growth and future success. Let’s go through some important areas one by one.
Confidence in cashflow
Money makes the world go around, as they say, and this is the biggest part of your business. Without a healthy cashflow, it can’t evolve and grow, and it won’t service you personally. Things are wobbly at the moment with the cost-of-living crisis and recession, so keeping money coming in is everything. But it’s worth putting plans in place for if things don’t go to plan. What will you do if your sales slow down or even stop? What ideas are on the table that you can get creative with? Make sure you’re clear on your income streams and especially the time it takes to get paid. Renegotiate payment terms if you have to so you can speed up payments. Perhaps you can take a deposit or stage payments if this works for your type of business or services.
Get to grips with your business running costs
This is a big one at the moment as energy costs and business rates are on the up. This can be incredibly daunting for business owners but there are things you can do, starting with communication. There was a startling fact that during lockdown only 45% of small business owners contacted their suppliers to work together on payment terms. At times it was possible to delay payments – which begs the question, what were the other 55% doing? Crossing their fingers and hoping for the best? Or perhaps they had a plan B in place – though with the pace that the pandemic hit, I’d be surprised. Always open the avenues of communication with your suppliers, with HMRC, with fellow small businesses – it’s always worth it. And, if your costs change have a plan in place and understand how you’ll tackle that.
Be prepared for fluctuating profitability
This heavily depends on the products and services you offer so it’s worth thinking about your plan if things change. What are the parameters you can change in order to stay profitable? What things can alter if you diminish or grow a little? Do have a think about the moving parts in your business and have a back-up in place.
Analyse how effective your marketing is and get smart with it
Are you evaluating your marketing and analysing what’s working well for you? You can do this in a few but effective ways. Ask your customers how they found you, try attributing an offer or promotion to a specific piece of marketing or look at your insights on social media to see where you get most traction. Knowing your data is the key to managing your marketing strategy. It also helps you make any shifts needed in line with what your audience is telling you, so do try and monitor it as much as you can.
Don’t forget too that in a downturn, marketing spend is one of the first costs businesses look at cutting. We saw from the pandemic that those who carried on marketing and were clever with it, came out stronger. If you think you can cut your marketing spend, I’d rather ask whether you can afford to lose the benefits it provides.
Are you covered if your staff aren’t around or you go off sick?
Do you have a plan to cover sickness and holidays? And I very much include solo business owners here. What do you do if a member of staff is off sick or what plans are there for a gap in the business? Look at realistic worst case scenarios (an outbreak of food poisoning after the Christmas party for example) and work forwards from there. Have you allowed for cover if someone goes on parental leave? Or wins the lottery and sails off into the sunset? I think that’s always a nicer scenario than the old “getting hit by a bus”.
Don’t forget to allow for your own cover as a solo business owner too. Can a family member help to pack and post your products if you’re sick? Do you have terms and conditions that protect you if you can’t attend a client session at short notice? Creating a short operations manual or instruction guide can help willing volunteers keep your business moving whilst you can’t. Arranging a reciprocal agreement for another consultant or therapist to cover your absence (and you cover theirs) can give you peace of mind too.
Don’t assume your IT will run like clockwork
Are all your documents saved and backed up? Are you working from an aged laptop and can’t access any files from elsewhere if it packs up? It’s not uncommon to lose a laptop with a mug of tea added gracefully into its keyboard… Do you have your documents saved securely and are they password protected? Or are they, like a lot of us, all over the place and perhaps access is a bit free and easy. If so, now is the time to get sorted.
Make sure your data is secure (considering GDPR), IT security (don’t share your business log ins with family or colleagues) and save your documents in a cloud-based system. If things go wrong, you’ll be thankful for doing this. So, as part of your end of year assessment make sure all your digital systems are safe and sound. If you need, get external help on this one. You’re not expected to be an IT expert but as a business owner, you’re expected to be professional and to have robust systems.
Do spend some time now the year is coming to a close and ask yourself the question “does my business need a plan B”. By following the tips above, you should have a bit more resilience and peace of mind going into 2023. If you need any help on business planning do get in touch.