Rick Smith, Managing Director of Forbes Burton, an insolvency and business rescue specialist, explains:
2020 was one of the most challenging years many in business have ever faced. Thanks to a global pandemic and the financial fallout that has resulted, what can firms do in 2021 to avoid further woes?
2020 was a year none of us expected. Much has been written about this already and doesn’t bear repeating, however looking to the immediate future, a focus on 2021 seems helpful.
To weather this storm and disruption to almost every facet of our lives, it’s best to set out a plan now and seek to execute it as soon as possible. If your company is at any risk, it’s best to know now, rather than have things catch up with you further down the line.
Get to know your company anew
It may sound simple, but getting the basics right is so crucial. Ask yourself, do you know your figures? Really going back to the plain and simple here, are you actually aware of your income and your expenditure? Is your cash flow looking healthy? Stripping back any existing ephemera from the situation, does your overall business look healthy? Sometimes it’s the equivalent of looking long and hard into a mirror that can save a company. Are you being honest with yourself? Are you running your day to day as if there wasn’t a global pandemic? If so, why? It may be a new year, but it’s also time to be brutally honest.
Strip back to basics
To get to the root of this, you need to lay out the foundations, gather as much information as possible about what is happening now and seek to shape an idea of what you think might happen in the future. This may seem an impossible task at the moment, but any mitigating factors that could arise from the situation we all find ourselves in could be your saving grace right now. Firms across Lincolnshire are now looking to shed unnecessary costs and overheads, and difficult decisions are being made. Could you avoid having to make these decisions under pressure by planning now? Could you protect yourself and your staff now by laying out plans?
Within this, consider looking back as well to your original business plan and projections. Do the figures match up? Does your business look as you may have envisioned when setting up? What periods have yielded the most success? It’s all worth looking at as it can uncover aspects of your vision that you may have missed at some point. Now is as good a time as any to regroup, have a rethink and be aware of the future.
Look ahead and plan
Based on what you have looked back on already, you should plan out objectives and goals and keep them realistic by forming a strategy that may well include difficult decisions. However, it is often easier to make these decisions right away, rather than delaying the inevitable. Keeping things moving that are not effective can sometimes be the reason a business slowly bleeds to death and nobody wants that.
Now may be a good time to write a new business plan, or to think about how your existing setup could evolve into something more diverse. For example, do you have resources that could be used to produce a new product or service? Are you making the most of your setup? It would also be a good time to really evaluate the office space or business premises you keep. In a world where most office or clerical work can be done remotely, do you need such expansive office space? Could you use this time to consolidate your space and set out a new way of working? Planning doesn’t always have to be financial, so consider what kind of company you would like to be running in a year’s time.
Each business will find that they have different costs that might be ripe for cutting, be that staff reduction, switching of suppliers or more subtle changes such as cutting down on outsourced service contracts, downgrading resources to suit your operational needs. It’s also not advised that changes are made suddenly and without due forethought. Cutting off parts of your business that can be improved or streamlined can prove unwise in the long run.
Be self-analytical and shrewd
The thing to remember to do is to keep track of changes made and whether they are working. Simply making sweeping changes and hoping for the best is also a key reason why businesses fail. Knowing what is working, where and how is the way to success here. The pandemic may have already forced you to be nimble and more analytical, but more reviews need to take place as the year unfolds.
Nobody would envy anyone in business this year, but to make the most of it, analysis and reality need to be front and centre of your strategies going forward.
