Making plans for the growth of your business is still something you need to do, but in a Covid-impacted market, there are some important considerations to include in the planning process.
It’s not that these considerations would have been excluded before, but the emphasis now is more important.
One – Ask two questions
To keep it simple, when you’re talking to customers and suppliers, ask two questions that will usually provide an abundance of useful feedback:
- How have you been most affected in this market/with the latest lockdown?
The answer may be positive or negative, but it will give you an insight as to how your customer is faring in a volatile market and how they are managing (and the potential impact that could have on your business).
- What changes do you plan to make/have you made in your business as a result?
The answer will give you insights into how innovative your customer is and how their customers are responding.
It will also give you a good indication of how relevant your products and services will be to them moving forward and what you may need to do to innovate and stay relevant to them.
For this exercise, talk to:
- Your customers and clients
- Your suppliers
- Similar businesses/competitors in a different geographic area, so there is no direct competition. This could be in a different suburb across town, in a different regional area, another state or even another country.
Two – Review delivery options and costs
Service businesses have options for delivery, from ‘figital’ services (face to face combined with digital delivery via zoom or Microsoft Teams or other apps) to providing packaged IP and content online.
Product-based businesses are incurring higher freight costs due to the increase in demand globally from growing online sales. According to an ABC report on June 10, 2021, the cost of sending a shipping container from China to Europe had increased five times since June 2020. Those increases will affect many of your customers and possibly your own business.
It is worth considering the following for delivery:
- Comparison between air, road, and sea freight to send deliveries or to order raw materials and components, for example
- Are you/can you add a margin to your delivery options for customers?
- If you are adding margin to customer deliveries, are you still covering costs for those expenses? It’s worth checking. You may think a good margin covers these costs but increases over time and ad hoc anomalies may mean that they have now become a cash draining cost to your business.
- If you provide local deliveries, is it worth sharing delivery costs with other similar local traders? For example, local food and produce stores may be able to share deliveries and offer a unified delivery service to local customers
Three – Revisit your marketing
This belongs in any planning exercise regardless but is even more important now.
The feedback you get from talking to customers and suppliers will be a critical input to your marketing.
What was previously the case may not apply now regarding which clients and customer segments you are targeting, the products and services that have become more important or less relevant, and how you reach and connect with prospective clients.
Real input from conversations and research is better than gut feel here, as you review all aspects of your marketing, including:
- Target market
- Core products and services
- Core messages
- Value proposition
- Pricing models
- Delivery and distribution options
- Customer service
- Communication channels, frequency & customisation
Four – Technology as an enabler
All businesses use technology of some sort in some way.
However, in current circumstances, it is certainly worth reviewing what sort of technology could be utilised across all core business processes, regardless of the size of your company. Most of these have been used for some time, but all businesses take a strategic approach to technology as an enabler:
- For team communication and document sharing – Microsoft teams, zoom, Slack, Google Drive, Airtable, etc
- For customers – what data-driven insights could you provide? Could you provide real-time updates on projects with live data feeds, for example?
- For recruitment – as for your team (zoom etc.)
- Business enterprise systems
- Client management systems
- Streamlined portals to access other databases or systems
Obviously, costs and resources to implement need to be considered against returns on investment, but if it improves your overall business capabilities, customer experience, or internal efficiencies, then it needs to be on the table for discussion.
Five – Scenario planning
With so much still unknown as we learn to live with a pandemic, scenario planning is critical.
Since we cannot assume conditions will remain as stable as in previous years, we need to base our planning assumptions on both positive and negative variables.
Base your scenarios on a best-case position for your business, a likely-case and a worst-case position.
Here are some variables I use to help model different scenarios:
- Timeframe – very short term, next six months, 12 months, two years
- Client base – what if you were to lose your largest client(s)?; what if you lost your Tier One clients because of what is happening to them in this market (e.g. cost-cutting, restructuring)? How likely would that scenario be?
- Products/services – what if your product or service becomes redundant? What if your offering becomes a ‘nice to have’ rather than a ‘must have’? Which clients could you potentially lose?
- Cashflow – what impact would different scenarios have on your cash flow and cash reserves, and what could you do to offset that/prepare for that worst case?
- People – are there any key people that you could be at risk of losing? What could be the impact on your cash flow of movements and/or new working arrangements with your team? Has your level of business changed that you now need more people, less, or no change?
Do you need to let some people go because you do not need that position anymore? What are the cost considerations of those situations?
- Expenditure increases – for this exercise, consider more the unexpected increases that could possibly occur, such as system upgrades; supplier price increases; rent increases; redundancy payouts; long service leave payouts etc. Also, consider whether you could or could not negotiate new terms or rates, such as with a landlord for rent.
If you factor these five steps into your business planning process, you should be well prepared to guide your company through the short to medium term planning period.
Read more: 10 steps to improve your cashflow in 30 days