As people and businesses start to emerge from the shadow of COVID-19 and its related economic fallout, we are constantly finding ways in which the business landscape has shifted. The coming year will continue to highlight the temporary and permanent changes to business as a result of the pandemic.
That’s why now is a great time to revisit your business plan and processes. At Alerus, we have observed several trends affecting all types of businesses that should be carefully considered in future plans.
Supply chains need nurturing
Many international and domestic supply chains were disrupted by transportation restrictions, closures or work reductions at suppliers, and changes to demand. The double shot of reduced supply and increased home improvement spending has sent lumber prices through the roof, for example. Consider reevaluating supply chains, proactively monitor inventory levels, manage supplier relationships and or diversifying suppliers. This may increase costs but may help build a safety net against future disruptions.
Business continuity planning is crucial
Many business owners struggled with staffing during the pandemic. While we hope another widespread health crisis isn’t in the cards, the pandemic highlighted the importance of planning for the unexpected. A solid contingency plan can help keep a business operating smoothly if owners or key employees are unable to work for weeks or longer. Tactics include identifying backups, forging mutual support agreements, buying insurance to bridge a financial setback, and establishing a succession plan.
Cash flow projections can make all the difference
If you haven’t already, update your income and expenses and do your best to forecast what you expect in the near future and longer term. Anticipating cash demands can save you money and stress. The pandemic may also have changed your business fundamentally – higher inventory requirements, slower collections, more sales online, or reduced space requirements, all impact cash flow. Even imperfect projections help you prepare for contingencies.
Equipping your business for a more digital future
Many businesses adapted to the pandemic by expanding their digital footprint – working from home, selling online, or shifting paperwork to e-delivery and digital signatures. For many, this paradigm shift in how work gets done is one they intended to stick with. But it still requires reassessing your business plan – you may need to budget for hardware upgrades, collaboration software, digital storage and servers, security consulting, or online transaction services.
Excess liquidity could mean opportunity
Due to scaled-back operations from the past year, low- interest rates, and extra government stimulus money in the economy, some people and organizations may have more cash available than usual. We have seen a surge in merger and acquisition activity across industries as investors seek opportunities. If you’re considering selling your business in the next few years, it may be advantageous to accelerate the process, given the current market conditions.
Have you run up against any of these changes and want to explore how to adapt? The business advisors at Alerus are ready to help. Alerus offers a range of business services to enable your transformation, and our advisors bring a wealth of insights from across industries that can help you adapt your business plan for what’s next. Talk to an Alerus advisor today.