Running a business without a plan is highly compelling – it’s easy to dismiss the idea of spending a lot of time researching and planning. You may be tempted to rely on your instinct to make the right decisions at the right time. But the most successful businesses in the world are run by people who plan their moves. If you want to guarantee the success of your business, you have to have an effective business plan for 2021. Here are the steps you need to follow to write the best business plan for 2021.
I. Disconnect Yourself
This may seem like an unnecessary part of creating a business plan. But given the absolute nightmare that 2020 has spelled for most businesses, this is more important than you may think.
1. De-stress Before You Plan
There is a high chance that the decisions you make regarding your business will be affected if you are stressed while making them. Research has shown that stress makes you make decisions based on habit rather than on the facts at hand. So, to ensure that the decisions you make are more practical than habitual, make it a point to de-stress before you start thinking about this. How you de-stress is up to you – it could be a walk in the park, a game of squash with a buddy, a rigorous PlayStation session – whatever it takes to put you in a good mood.
2. Avoid Emotional Decision-Making
The events of 2020 have been highly emotional for most people. Losing loved ones, living in fear, sustaining financial losses, burning up savings… In addition to the sheer stress of coping with all this, the past year has most probably also raked up a lot of emotions. You will need to take conscious measures to ensure that your unresolved emotions don’t interfere with the business decisions you make. This does not mean you need to shut out how you feel. Instead, give yourself time to feel the way you feel. Allow the feelings in, then acknowledge and process them. Once you allow yourself to accept what you’re feeling, it gets much easier to keep the emotion out of your decisions.
As a way to ensure that emotions stay out of your decisions, you can create your plan and shelve it, only to review it a day or two later. Giving your emotions time can help ensure that they settle down. You will be able to identify decisions you’d made from an emotional state of mind when you review things after a while, thereby keeping yourself from acting on them.
Once you have centered yourself and you are mentally prepared to face facts objectively, it’s time to bring out the books. You will need ready access to the financial records of the entire past year before you begin.
1. Understand Your Business Metrics
You cannot hope to figure out whether or not your business is doing well if you don’t first decide which metrics you want to track. This is because success and failure are subjective terms and humans are susceptible to developing observer’s bias, which is a situation where people subconsciously only consider evidence that supports the outcome they want while ignoring all evidence to the contrary.
To ensure that you get a balanced perspective of the year 2020 in review, you will need to know exactly what each available business metric reflects. If you are well-versed with corporate and financial jargon, you may already know your way around business metrics. But if you don’t, we strongly recommend that you brush up on the basics first.
Once that is clear, you can decide how to prioritize the various metrics at your disposal. It’s important to assign weightage to the metrics well before you look at your past year’s records so that you don’t subconsciously pick metrics that show a better picture than what happened. Doing this will help you measure your past business performance objectively.
2. Identify Opportunities
The data in front of you will be very useful in helping you pinpoint times when your business suffered. It can also help you trace every low phase back to the entire chain of decisions that led to the low phase. Obviously, in 2020, a lot of the lows that businesses faced had nothing to do with their internal decisions. So, it may feel pointless to delve into the process of finding the decisions leading up to them.
But 2020 can be a very strong learning experience if you harness it well. Tracing business lows back to the internal decisions made in the run-up to them when you have the benefit of hindsight, will allow you to learn what you could do better if you are ever in a similar situation again. You may be able to draw lessons that will help you stay prepared for worse situations in the coming year. These can all be listed under opportunities to ramp up your business performance in 2021.
III. Identify Key Metrics for 2021
The internet is replete with financial predictions for the year 2021. It will do you well to read up on these and get a lay of the land, so to speak. Doing this will help you predict approximately which metrics will gain and which ones will suffer during the year. When you know what to anticipate, you will be able to prepare your business for it. This will help you make the most of the highs, which in turn will help you minimize the impact of the lows on your business.
1. Chart Out Target Metrics
Based on the insights you gain into the business metrics to look out for in 2021, you can create charts that show the expected performance of each metric through the year. Juxtapositioning all the metrics will give you a holistic picture of how your 2021 might look.
Now for the crux of the matter – actually creating your business plan for 2021.
1. Set Your Targets
The first step to creating an effective business plan for 2021 is to set targets. Once you have the data regarding the past performance and projected market conditions, you will be able to picture how your business should perform at various points during the year. So, now is the time to set in stone these expectations.
The targets you set should be clear, concise, and measurable. It simplifies the whole process of revisions you will have to do based on actuals during the year.
2. Devise Methods and Alternatives to Achieve Your Targets
Now that you know what you want your business to do, it’s time to plan out how you’re going to go about doing it. This step of the process is what makes the difference between wishing and planning.
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Remember, however, that business environments are extremely volatile in general, but they will be much more so in 2021. We recommend that you have at least one alternative way to achieve your targets that do not rely on the same assumptions made in your main strategy.
V. Prepare Your Business Plan for 2021
Finally, it is critical to put your entire business plan (along with the thought process behind it) into words and present them to all your employees and stakeholders. It is imperative that everyone is on the same page about the objectives and expectations for the coming year. Failing this, your entire plan may be at risk, since different arms of your business may be working to achieve unrelated targets. This will severely dilute your efforts.
VI. Diligen Can Do All This For You
As you can see, creating a business plan is a LOT of work. It requires time, patience, and focus that you may not be able to balance alongside the mammoth task of running your own business. At Diligen, we are aware of the difficulties of creating an effective business plan for 2021. As experienced players in the outsourced finance and accounting arena, we are well-versed with business processes, metrics, and helping businesses harness financial data for success. We can help simplify the entire process for you by custom-making the best business plan for 2021 for your company!