Some things in life are certain… The toast will fall buttered side down when you drop it on the floor. It will automatically rain on the day you forget your umbrella.
And, that call you have been waiting for all day will come through the second you dash to the toilet! But, some things are far less certain. Both 2020 and 2021 have highlighted that in a big way!
There are always unknowns lurking just around the corner, whether they are in your personal life, business life, or via unexpected global events. Sometimes, it is possible to make educated guesses about future events. Then there are the things that seem to come and smack you in the face out of nowhere.
How can you plan for things you may never have considered?
You want to safeguard your business as much as possible. So, read on for our best advice about how you can financially plan for the unexpected.
We don’t know what the universe has in store for us. This is especially true when we are moving in and out of lockdowns and unable to operate business as usual.
While the global pandemic is front of mind currently and no one could have predicted the scale of its impact, there are plenty of other unexpected things that could mess with your carefully crafted business plan.
So, we have been helping many of our clients with risk management plans. That way, they have something to fall back on when the unexpected happens. Our motto is that if you plan for the absolute worst, then you might be pleasantly surprised with what actually plays out.
The biggest risk is not having a plan at all. A plan gives you something to work towards and offers a sense of normalcy or routine in an otherwise stormy sea.
Often, when things go wrong in business, they go really wrong! Putting on the rose-tinted glasses and adopting a she’ll be right attitude is not going to make the problem go away.
Preparing for the unexpected will help though. While it seems strange to plan for things that might never happen, you will be thankful for that plan IF the proverbial hits the fan and the worst does happen.
Whether it’s business as usual or you are in crisis mode already, conduct some scenario planning. Consider what could potentially happen to your business if you were unable to trade (or trade at full capacity) for a month or more. Think about the impact of losing an important supplier, if your delivery systems were affected, or you had a medical issue.
Don’t dwell on the negativity of planning for the worst. Rather, focus on the solutions you can put in place to negate some of the fallout. Having those solutions ready and waiting will allow you to react quickly if the unexpected becomes a reality.
There are any number of solutions that might work for your business. One that is universal and a fundamental financial planning necessity is an emergency fund. The ideas is that you budget how much money your business would need to survive for 3-6 months, then start building the funds in a separate account. You should also resist the temptation to access this fund for anything other than an emergency!
It is easy to feel overwhelmed when there are a lot of factors outside your control.
So, rather than stressing about the things you can’t control, focus on the things you can. You probably can’t do much to open the borders or fix the economy, but you can do things like review your spending, cut your costs or apply for financial support if you qualify.
And the real secret is, to not wait for the worst to happen before implementing your plan. Do the homework now so that you know which costs you could cut or where you can turn to for financial support. Even better, if you can start implementing cost saving strategies now, you can funnel any money you’ve saved into your emergency fund account.
Five and ten year goals are essential for your business. But in the midst of a crisis, achieving them can feel very far away! So, it can be helpful to turn your attention to smaller goals in uncertain times.
By achieving small wins, you will feel like you are still making progress despite what is going on. Instead of stressing about meeting those long term goals, shorten your timelines significantly. Focus on making it through one month at a time, or even a week if you prefer.
Following a budget can be tricky when the goalposts keep moving. So, rather than sticking to something prepared months ago (that may not be relevant any more), move your timelines around and plan for a couple of weeks at a time while keeping one eye on the big picture.
Staying flexible is helpful for more than mastering Yoga positions! Experiencing the unexpected can be a great opportunity to find better ways of doing things. It might feel hard if you are forced to tighten your belt and introduce greater efficiencies now.
Yet in the long run, these efficiencies could help your business run better!
Your Business Plan is a living document, so don’t be afraid to review and refine it to suit your current circumstances. Think of it as a work in progress that you can adjust as you learn new things.
It also doesn’t hurt to explore ways you can diversify your offerings. Could you add digital products, teaching materials, a complementary product line, or online services to help see your business through this tough time?
Constantly monitoring the news reports and your bank accounts can get stressful. While it is important to stay informed about what is going on in the world (and during a crisis), it is equally important to not get consumed by the information.
Stay up to date on what is going on so that you can spot potential problems as they might arise. But, don’t forget to take time away from those information sources too.
Remember to be kind to yourself also. Burnout and overwhelm are really common in times of crisis, so try to maintain a good balance between work and home life.
Heading into unfamiliar territory with your business can be daunting. But, you don’t have to tackle a crisis alone. In fact, calling in an expert can be really beneficial. An expert set of eyes can help you identify immediate risks and focus on the right direction for your business.
At Wise Advice, we have a skilled team of Accountants and Financial gurus that are great at supporting businesses like yours through the financial unknown. We can look at the story your numbers are telling and how that relates to the wider picture your business is painting.
With plenty of advice and tips, we can help you stay on top of your finances in times of crisis and in times of normalcy. So, if you are looking for an expert to help you financially plan for both the unknown and the known, we are the team for the job.
Book a time to speak with one of our team today.