Business trends are the results of changes in attitudes, values, technologies and the economic landscape and tend to drive strategic decision making, in all sizes of businesses. And oh boy, did the landscape change in 2020!
In part 1 of this report we looked at small business trends related to remote and flexible working and consumer purchasing. In part 2 we now will look at how technology and recent events have changed the way businesses are likely to manage finances and do business in 2021.
Seeing into the future is hot right now
Cashflow forecasting became an important tool in 2020, but it’s not just helpful in a global downturn – businesses can experience a cash shortage at any time. In fact, 70% of business owners say they’ve experienced cashflow difficulties at some time (Xero, 2019, Needs Beyond Accounting).
Cashflow forecasting plots projected income and expenses on a timeline and allows you to identify any money shortages. The ability to see round the corner (and into the future) is useful at any time, but particularly when the market is unpredictable too.
Rainy day funds are going to bulk up in 2021
Contingency planning has always been a line on the budget, but, like cash flow forecasting, it became more than a budget line in 2020. For some businesses it meant the difference between survival and closure. That contingency, which more often than not sits quietly in the bank account, was suddenly needed to transform operations, take sales online, buy new lines of inventory, or introduce extra health and safety measures. It helped other businesses ride out the drop in sales that happened when customers hunkered down at home.
But not every business had the cash cushion they would have liked. That’s not surprising – it’s hard to sit on a pile of money. Small business owners generally prefer to put profits back to work in the form of capital investment or extra marketing. However, events occasionally come along that remind us how important it is to have a rainy day fund. 2020 gave us that in spades.
Business relationships will get a whole lot more love
During 2020, businesses relied on goodwill from suppliers, customers and employees. Everyone cut everyone else a little bit of slack, supported each other and rallied around to support industry as a whole and local communities. In fact ‘support local’ became a really important part of our identity.
Kindness really is an important business strategy. 93% of consumers say they’d buy more from (and recommend) a business that showed empathy towards the community, and 69% said they feel proud of local small businesses (Forrester study, 2020). Business relationships just got significantly more important.
Business continuity planning isn’t for the paranoid anymore
Business continuity planning was always the right thing to do, but who really had the time? Not many. Then along came 2020 and suddenly lots of people started fitting it into their schedule. According to Xero, Google searches for ‘business continuity plan’ leapt 600% year on year.
As the name suggests, a business continuity plan is a set of strategies to help you power on through a disruption. That disruption might be the loss of a key customer, or supplier; a fire, flood, or recession; or, say, a global pandemic. There are many examples of businesses who adapted quickly to what happened this year. Having a process for assessing and responding to a crisis can certainly help with that. That’s why continuity planning will probably stay top of mind for a while.
‘Pivot’ is the buzzword that will never end
And speaking of adapting quickly the buzzword for 2020 has to be ‘pivot’. The ability of businesses to change the fundamentals of how they do business, or pivot, was the key to survival in 2020.
What it really means is being flexible and open-minded to change. Having rainy day funds and cash flow forecasts, a great relationship with your suppliers, customers and employees and undertaking business contingency planning, all help to make a business flexible. In fact, knowing all the facts allows you to focus on what’s really important to grow your business, whatever is happening in the marketplace. The businesses that were able to pivot fastest were the key survivors of 2020 and some will even thrive in 2021!
How can we help
If you would like to know more about how Business Process Outsourcing can help you to focus your time where it’s really needed, then get in touch.