Recovering from Lockdown - Small Business Trends for 2021
2020 was undoubtedly an odd, weird, cumbersome year, one that placed unique and almost insurmountable challenges in front of businesses. The resilience of small businesses knows no bounds, however, and recovery is strong. How will things look going forward?
Cash Flow forecasting
Status: CRITICAL
Cashflow has always been important for a small business because it is the timeline tool that shows where the shortages are. During 2020, revenue dipped for most small businesses whilst costs stayed mostly fixed. As a result, cashflows stuttered.
The majority of business owners say that they have experienced cash flow difficulties. And whilst it is easy to think that these problems are now a thing of the past with lockdown easing, this may not be the case. Deferred loan payments will start again, as well as tax payments and other deferred payments.
If there is one thing that 2020 taught us, it is just how important planning and forecasting is. That means looking beyond the week or month and seeing further into the financial future of your small business.
Building back with a financial buffer
Status: CRITICAL
When lockdown hit, it hit some small businesses hard. Without a contingency fund, it hit others harder. There was Government help but for some businesses, they fell down the gap.
A cash cushion has always been good financial practice but for some, this can be hard to build. The answer lies in good decision making. As a business, you might not want to sit on a pocket of money, preferring instead to boost marketing efforts, for example, or buying equipment but, a small stash of money in the business bank can make a difference.
Some business owners opt for an operating buffer of £1,000, for example, great for a micro business or sole trader. For slightly larger businesses, a rainy day fund of 4 months’ operating costs is a great place to be.
B2B and B2C relationships
Status: ESSENTIAL
It has always been the case that people buy from people but the ‘togetherness’ that the lockdown instilled seems here to stay. This means that nurturing the loved up relationship you have with suppliers should stay, as well as promoting your small business to the local community.
The vast majority of people say that they want to support small businesses more and are more likely to do so when they feel that the business is active in their community.
Online working is here to stay
Status: ESSENTIAL
Working from home is one thing, hybrid working is another but it is true to say that small businesses who were already operating in the cloud pre-lockdown fared much better than those that had to shift most or all of their work online.
Employees working from home or a mix of office/home is an option for small businesses too. Providing you have secure online services, this shouldn't be too much of a problem. There is also loads of useful information about remaining compliant as a business during this era of working from home too.
Selling online, if you can
Status: CRITICAL (for some)
There were limited options when it came to retailing as non-essential shops were ordered to shut. During lockdown, shoppers turned their attention to online and so if you can have an e-commerce presence, now is the time to jump in with both feet.
Predictions are that online shopping will remain a top trend for the remainder of the year and well into 2022 too. Great news for e-retailers and delivery companies, but perhaps another swipe at the ailing high street. That said, for high street retailers there are various schemes coming to fruition to help them out.
Business continuity planning
Status: ESSENTIAL
Business continuity planning is no longer just for the paranoid but like cash flow forecasting, an essential business step.
Continuity planning looks at the risks faced by a business and, should the worst happen, what needs to happen so that the business can remain functional. No one could have predicted a global pandemic would strike and yet here we are, battling our way out of one.
Whilst some businesses survived, others didn’t. This was the result of their income drying up overnight but in some cases, a rigidity that meant they couldn’t adapt quick enough.
Understanding what could cause a massive headache for your business means you have the forethought to trade your way out of it.
In summary
Every business is different but we all battle similar challenges and bumps in the road. There are more changes ahead but with planning and forethought, nothing is insurmountable.
