How to Develop a Business Plan: A Primer for 2021 and Beyond
Every business needs a plan, even in uncertain times. If 2020 has taught us anything, it's the old saying about hoping for the best but preparing for the worst.
The past year brought extraordinary disruption and change, forcing many businesses to pivot in ways they never expected. With so much uncertainty, creating a business plan may seem like it isn't worth the effort. But even in times of crisis, your business needs a road map for where you want to go and what you hope to achieve. Here's how to develop a business plan for 2021 and beyond, as well as how to make it flexible enough so you can adjust to whatever happens next.
What makes a good business plan?
A good business plan must include SMART goals. SMART goals are specific, measurable, attainable, relevant and time-bound. For example, if your goal is to increase revenue by 10% by the end of 2021, that's a specific goal that's also measurable and time-bound. Whether it's attainable will depend on the business landscape next year and whether the goal you set is realistic in the first place. However, setting a 10% goal is likely more attainable than saying you want to double your revenue year over year. A relevant goal should align with your mission and long-term vision for your company. It should help you hone in on what's important—and worry less about everything else.
Along with setting SMART goals, the key to an effective business development strategy is to include not just your what and why but also your how. Setting a 10% revenue goal is straightforward, but you need to think about how you'll achieve it. This could mean incorporating more digital payment options like mobile wallets into your payment experience, launching a customer loyalty program or creating special themed days with discount offers. Think 10% off sports apparel on NFL game days or a Flashback Friday promotion.
From there, you can break down your larger goals into smaller, more manageable tasks with timelines attached to them so you can measure your progress.
Tackling future business disruptions
Creating a business plan requires setting aside time and doing the critical thinking necessary to map out your strategy. This can be challenging even when business is good, but when things are uncertain, it can be even more difficult to focus on long-term planning.
Even during good times, you never know what to expect as a business owner. Although the pandemic has made things more unpredictable, you can glean some insights from what has happened this year to better prepare for the coming years.
The economic rebound may be a little slower than expected, so that may mean your business should increase its cash reserves, if at all possible. If you would've previously set aside a 3-month reserve, see if you can increase that to 5 or 6 months to give yourself more of a cushion. If you experienced supply chain issues at the beginning of the pandemic, maybe you could benefit from establishing relationships with other manufacturers or set expectations on when they can receive their items. If you notice more consumers online shopping, maybe now is the time to revamp your website or offer options like curbside pickup for online purchases. The most important thing is to be agile and nimble because change is the only constant in business.
Preparing your strategic plan
Being a business owner can be both rewarding and challenging. The reason most people do it is the joy of charting your own course and developing a product or service that delights customers.
Strategic planning is a key part of ensuring your business is sustainable. It also gives you a plan you can confidently refer back to when challenges come your way. Put your goals in writing and map out your business development strategy. Even if you have to adjust over time, having a clear vision of where you want to go will help ensure you're headed in the right direction.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.