5 reasons why business owners should update their business plan to get through Covid-19

The pandemic has changed everyone’s life, and for companies, the effects have been pretty serious. A lot of them had to rethink the way we interact with their customers along with their operational system. 

If you are a business owner, you might feel a bit lost and this is completely normal. After all, we’ve never had to live through a pandemic before. 

To get through these challenging times, a business plan is a useful tool in order to put together an effective action plan to navigate your business through this pandemic. 

We’ve laid out the 5 main reasons why you should consider one. 

Know where your business is at and where it is going

As the pandemic evolves, no one is certain whether things will ever go back “to normal”. It’s important for your company to find ways to adapt to “the new normal”. 

Draw a clear picture of where you stand by laying out what should have happened and what hasn’t because of the pandemic.

Start by comparing your current sales to what they were last year and what you expected for this year. This will enable you to quantify precisely the impact of the pandemic on your business. 

Then, make sure to set new goals and targets, even if they’re completely different. Here you will have to consider different scenarios: will the economy recover quickly (the famous V shaped recovery everyone is hoping for), or will it be a slower rebound?

Map out these different scenarios by creating multiple business plans to find out what changes you need to make in order for your business to remain profitable. 

Manage your cash on a short term basis 

The pandemic has hit most companies’ cash position hard. Particularly those in the hospitality and entertainment sector which have been forced to close. 

As the economy starts to reopen, it’s time to have a look at your cash flow to make sure you have enough runway to keep operating until things get back to normal. 

Updating your business plan will help you get a clear picture of what your cash flow will look like in the coming months and whether or not you need extra financing.

Analyse the possibility to reduce your costs 

Whilst having a precise idea of where the company is at and keeping a close eye on your cash is important, you also have to take into account the possibility of reducing your costs. 

For most companies, the biggest lines of expenditures are rent and wages. Several options are available from pausing recruitment processes, reducing staff hours, or even asking your staff to take a pay cut. 

If you’re currently renting an office, but everyone is working from home, you can maybe try to end your contract, sell your lease and perhaps find a new office once everything is settled. 

You might be eligible for some specific Covid-19 aid to make sure you can manage your costs such as salaries or rent. You could also discuss with your suppliers in regards to payments, and contact your bank for a repayment holiday. 

Putting together a business plan will force you to list every current and planned expenditure, and help you identify what you can reduce. 

Identify what impacts are likely to be long-lasting  

The economy starts to reopen, but it will take some time before we go back to the business as usual state we enjoyed pre-COVID. 

If you own a restaurant, it is likely that the reopening will still have a significant impact on your business. The number of seats will be reduced, as you will have to observe social distancing measures, and this means your revenues won’t be as high as they were. Your staff will also be forced to observe social distancing, meaning they won’t be as productive. 

This can be difficult and will require adjustments to be made to your premises or your business model. For example, switching from table service to takeaway.. 

If you are a B2B company, you can also anticipate most likely to lose clients due to bankruptcy and try to refocus your business on less impacted sectors.  Identifying these impacts and risks in your business plan will help you come up with new ways of generating revenues. Brainstorm strategies and scenarios by laying them all out on paper, and make sure you communicate with your team to gather as many ideas as possible. 

Seek financial aid or find new investments 

During this pandemic, most governments have put new measures in place in order to help businesses to stay afloat, but this doesn’t mean this will be sufficient depending on the size of your business and the aids provided. 

Being in difficulty doesn’t keep you from seeking financial resources elsewhere. Banks may be reluctant to lend, especially if you are in a sector which has been hit hard, but you can always try to launch a crowdfunding campaign or seek investment from private investors. 

The important thing to remember is that you will need a business plan to convince people to invest in your company. Demonstrating that you are on top of your cash flow and that you have planned for different scenarios, will help you make a strong case for yourself to convince potential investors. 

If you are not sure where to start to create your business plan, you can always use an online business plan software.

Using a professional business plan software  several benefits: 

  • Answer simple questions and let the software crunch the numbers for you
  • Communicate your numbers easily with pre-built charts and financial tables
  • Get a professional business plan ready to send to investors

If you’re interested, The Business Plan Shop allows you to try their business plan software for free on their website. 

We hope this article has helped you understand how a business plan can help you navigate the pandemic!