How do businesses plan for the unknown in 2021?
Even after we have a return to some form of normalcy, challenges will remain
As a business owner, you wear multiple hats. One moment you’re the accountant, another moment, you’re managing your team of staff, and still another moment, you’re working directly with clients. In so-called normal times, this would all be a lot to juggle, but during these uncertain times that began in 2020 and continue into 2021, how do you plan to manage your business in a world that remains unpredictable?
To begin, many indications point to a return to somewhat normalcy in 2021, especially toward the end of the year. Vaccines are being approved for use, and while the distribution of them has been complicated, more and more Americans are receiving the shots. In addition, further stimulus continues to roll out, which will help support individuals and companies particularly impacted by the pandemic. We are beginning to see the light at the end of the tunnel – when vaccines are more widely distributed and the economy opens up more, we anticipate seeing consumer confidence grow, an unleashing of pent-up consumer demand and more capital expenditures by businesses.
Even after we have a return to somewhat normalcy, however, challenges will remain. The pandemic has fundamentally changed the way businesses operate, so it’s important to work with a financial partner on a strategic plan that takes into consideration these “new norms,” such as utilizing technology to meet online rather than in person. We work closely with our clients to focus on what they want the business to look like one to five years from now and how they can leverage some of the changes in buying habits that will be a holdover from the pandemic.
For example, companies in the retail space have seen a significant decline in foot traffic and this will not suddenly be a non-issue once the pandemic eases. In order to compete with online sellers, these businesses will need to create an experience that drives customers through the door or leverage an online platform that will allow them to reach a broader base of clients. Similarly, restaurants may find that patrons continue choosing carry-out or delivery versus dining in. As such, these companies will need to evolve their business models to meet their customers where they are rather than automatically revert back to pre-pandemic practices.
As a business owner, there are some important steps you can take as we continue to navigate through the pandemic and begin to plan for what the future may look like when we find ourselves on the other side of it:
- Do an evaluation of the needs of your business to determine the most efficient means for your business to be successful. This could include reducing office space, increasing a technology budget allowing for remote employees, or the need for more of a specific type of space in order to accommodate growth.
- M&A activity has seen a significant uptick. Are you in a position to buy a business, or buy a share of it? Conversely, if you’re near retirement, are you ready or interested in selling?
- If you are in the position of buying or selling, think of future generations. If you have family or staff members who you think may want to be involved in the business, it’s better to bring them into the conversation sooner rather than later – and allow your banker and other third parties to help advise in order to help ensure everything is structured in a way in which all (or most) parties are satisfied.
Although COVID-19 has presented unprecedented challenges for business owners, it also presents opportunities as old conventions are re-evaluated and new ways of conducting business have been tested and proven out over the last 10-12 months.
Adam McDiarmid is the Executive Director of Business Banking at UMB Bank.