As a tumultuous 2020 draws to a close, the arrival of a new year is the perfect time for small business owners to start thinking once again about their long-term goals—not just making it through the month.
Small business owners should take time at the end of every year to plan their goals, strategies, and tactics for the coming year, but it’s more important than ever in 2021. The outlook for 2021 is optimistic, and making a plan for how you’ll respond to the ongoing pandemic and economic turbulence as well as setting goals and creating a strategy for how you’ll return to normal and continue to grow will help your business prosper.
When it comes to planning for 2021, the key is to embrace flexibility. While long-term goals are crucial for keeping you on track, complementing your long-term plans with short-term, quarterly objectives can help you stay nimble and adapt to the constantly shifting reality of operating a small business in 2021.
Get ready for Q1 of 2021 with 11 of our best small business planning tips:
1. Acknowledge reality
As optimistic as you may be about your prospects for the new year, don’t forget about the challenges you faced in 2020.
Before you make lofty goals for 2021, take a look at the current state of your business with a critical eye, including your financial statements, inventory, and product or service offerings. With a firm understanding of these factors, you can start to create a plan for 2021 that accounts for your business’s current conditions.
A SWOT analysis that evaluates strengths, weaknesses, opportunities, and threats can help you identify areas where you’re struggling, as well as areas where you can grow in 2021. For example:
- What product lines or services are the most popular? Has the pandemic changed demand patterns?
- What marketing tactics served you well (or poorly) during 2020?
- Has your audience or buyer profile changed?
- Did buying patterns and behaviors change? Are people buying online more? Are they buying different products? Have their buying cycles changed?
- Do you have enough working capital to help you achieve your goals in 2021?
2. Set realistic goals
The outlook for 2021 may be hopeful, but things won’t return to “normal” at the stroke of midnight on December 31. It will take time for the economy to stabilize, and consumer behaviors may never return to their pre-pandemic patterns.
Using your SWOT analysis, you can set long-term goals to keep you on track as well as short-term goals that will help you move towards your long-term objectives. Think carefully about what you can realistically accomplish, then evaluate whether you have the resources available to help you achieve your objectives. For example, if your goal is to set up a website so you can sell products to customers across the country but you don’t have the infrastructure in place to actually fulfill and ship orders, this goal may not be realistic (or you may need to apply for funding to help build your website and fulfillment infrastructure).
Many businesses may not have the capital they need to achieve their goals in 2021. If you’ve run out of PPP or EIDL funding or never received any in the first place, alternative funding from direct online lenders like Greenbox Capital® can help you access the working capital you need to adapt and continue to grow. With easier qualification criteria and a faster application process, you can get the funding you need in as little as 1 business day.
3. Work with what you already have
Focusing on your existing strengths can help you identify ways to stand out from your competition and continue to provide top-notch service to your audience without requiring a significant financial investment.
Think about your existing customers as well. On average, it costs 5 times more to acquire a new customer than it does to close an existing one. Reward your most loyal customers by offering deals and incentives, and keep your eyes peeled for opportunities to upsell, cross-sell, or encourage repeat purchases using social media ads, email marketing, and other tactics.
4. Create a quarterly action plan
A quarterly action plan helps connect your short-term objectives with your long-term goals. Choose 1-3 areas to spotlight in the coming quarter, such as increasing online purchases, speeding up online order fulfillment, or more newsletter sign-ups. For each goal, list out your criteria for success—what do you need to see in order to know if you’re achieving your goals? Choose criteria you have control over and set key performance indicators (KPIs) for each goal—for example, total number of online orders, average order fulfillment time, and total number of new newsletter sign-ups.
Once you’ve set goals and determined your criteria for success and your KPIs, you can plan out action steps and set milestones for each goal. Include detailed tactics, who is responsible for what task, and when it needs to be completed to keep your team on track.
5. Support your employees
Your employees have supported you throughout a difficult year, and it’s more important than ever for small business owners to take care of their employees in return. In Q1, work to create a supportive company culture that puts people first by:
- Communicating goals and responsibilities clearly with your entire team
- Asking your employees for their input on what changes you might want to make, especially if they deal directly with clients and customers
- Involving key people such as managers and department heads to make sure everyone’s needs are heard and respected
- Offering mental health benefits and programs to support the well-being of your staff
6. Create a plan for responding to COVID-19
The pandemic isn’t going anywhere in the first quarter of 2021. Guidelines and restrictions are constantly changing, and creating a plan for how you’ll handle things like closures or service reductions before they’re mandated will make it easier for you and your employees to make the transition if the time comes.
7. Build a budget
A budget is a vital tool for helping you manage costs and deal with unexpected financial surprises. Having a budget in place also puts you in a better position to get funding from both traditional and alternative lenders.
Your budget should never be set in stone. Instead, it should include a comfortable buffer to allow you the flexibility to accommodate unexpected changes or expenses. Make a plan to revisit your budget monthly and quarterly so you can make adjustments based on your actual expenses and your most up-to-date projections.
8. Build up some cash reserves
When you’re building your budget, set a certain percentage of your daily revenue aside to create a reserve of cash you can draw on in the event of unexpected expenses. Additional federal stimulus funding is unlikely, and having cash on hand will also strengthen your application if you need to apply for small business funding from a traditional or alternative lender.
Aim to set aside a minimum of 5% per day. If 5% is too much, you may have larger cash flow issues. This is a good sign that it’s time to revisit your budget to see if you can reduce your expenses.
9. Track your progress
If you created a quarterly action plan, you’ve already determined your criteria for success and the KPIs you’ll use to measure your progress.
Tracking your progress regularly—at least monthly, or ideally weekly—will help you stay on track to achieve your short- and long-term goals. Set milestones to determine where you will hopefully be at the end of the quarter, then regularly measure your KPIs and review your progress so you can make adjustments to your actions and expectations as needed.
10. Grow your marketing program
The pandemic may not be going away any time soon, but your audience is out there and ready to buy. Growing your marketing program can help you take advantage of new opportunities that have opened up in spite of social distancing, including new channels and online tactics.
Get 12 ideas for marketing your small business during COVID-19
11. Start planning for filing your 2020 tax return
Tax laws change regularly, and there are new deductions available in 2021 to help businesses cope with the impact of the COVID-19 pandemic. Set a time early in the year to meet with your tax preparer to determine which deductions and credits apply to you.
Investing in your business in Q1
Over half of businesses surveyed in the first phase of the U.S. Census Bureau’s Small Business Pulse survey reported a decline in operating revenue between April 26 and June 27, 2020. As 2020 draws to a close, many business owners are continuing to experience decreased revenue and other challenges associated with the COVID-19 pandemic, such as reduced workforces and limited cash flow.
Taking the time to review your performance in 2020 and make a plan for the first quarter of 2021 can help you get your small business back on track and on the road to “normal” in the new year. But rebuilding and growing your business takes working capital, and you may not have the funds you need to support these goals.
If you’ve run out of PPP or EIDL funding or never received any in the first place, alternative funding from direct online lenders like Greenbox Capital can help you access the working capital you need to achieve your long- and short-term goals. With loans as small as $3,000 up to $500,000 alternative lenders offer a number of advantages over traditional lenders like banks and SBA loans, including:
- Easier qualification criteria with less paperwork to gather
- Faster review and approvals, with approval in as little as 2-5 business hours and funding in a little as 1 business day
- No restrictions on how your funds are used—use them for payroll, everyday operating expenses, or to kickstart new ideas
- A variety of funding options are available to suit your business’s needs, including merchant cash advances, small business loans, invoice factoring, collateral loans, and business lines of credit
- Businesses with low credit can receive funding. Instead of focusing on your credit score, our Funding Advisors will review the overall health and potential of your business
- Businesses in high-risk industries can also receive funding