Many of us are looking forward to putting 2020 behind us and welcoming in a new year. The idea of a fresh start is refreshing and business owners are looking to prepare their businesses for 2021 and beyond.
Looking back on 2020 and acknowledging what worked and didn’t work for you and your business is vital to mapping your 2021 approach. While there are numerous areas to think about, including operations, human resources, and sales, these four key steps will help point your business in the right direction.
“Flexibility will be the central theme for 2021. Preparing multiple options may help the process of being prepared for the unexpected.”
Build Your Budget
The start of the new year is a great time to prepare your budget. And entering 2021 marks a critical time to sit down and analyze your future.
The COVID-19 pandemic of 2020 caused many businesses to realize that the traditional static budget of using fixed inputs and outputs was no longer necessarily useful. Creating a fluid and flexible budget that can adapt to changing business realities is now the new reality.
As many small businesses were stretched to the max in 2020, feeling like you were always reacting was the norm. You were stress-tested and learned some valuable information. Use that knowledge and combine it with a proactive approach.
Creating a “perfect” budget for 2021 is probably unrealistic, as things possibly get more difficult before returning to normal, building a better budgeting process is attainable. Businesses should consider preparing a few different budgets that capture best and worst-case scenarios that roll back spending to factor in contingencies for scarce resources or slowed demand. This rolled back spending can create contingency funds that can be used say when demand for your products in certain parts of the country increases or when customer retention rates drop.
Collaborate with your managers to prioritize tasks and projects to justify when and how much to spend. New or special projects that were important at the start of 2020 may be optional for 2021. If you pivoted and launched new products in 2020, access whether you want to include these revenue sources in your 2021 budget.
Flexibility will be the central theme for 2021. Preparing multiple options may help the process of being prepared for the unexpected.
We provide your organization a true end to end solution to all of your tax needs. Tax season is year round to Protea – if you aren’t preparing daily, it’s too easy to get behind. We are always working with your organization to streamline your businesses tax management.
Talk to Banks and Shareholders
If you haven’t already been having an ongoing dialogue with your bank, start one in 2021. With 2020’s unprecedented business environment, banks have been working round the clock to help their customers. They’ve likely encountered every possible scenario a business could face. You should rely on their expertise to guide you, but they can only help you if you are honest and prepared
Whether you need a bridge loan to finance operations, need help completing your PPP loan forgiveness application, or need a line of credit in the event you need short-term cash flow in 2021, start the conversation today.
Similarly, start a conversation with your shareholders and partners. Set a realistic tone and expectation for 2021. This will be easier to do once you’ve completed your budgeting scenarios. Let them know the worst and best-case scenarios and explain how you’re prepared to adapt as the uncertainty of 2021 unfolds.
Although the thought of having these difficult conversations with shareholders may be stressful, they will appreciate your honesty and place further trust in you that you’re making the right decisions for business success in 2021.
Move Your Back-office Away from Paper
If you weren’t previously optimizing your use of technology, the pandemic quickly forced you to. When administrative offices closed to keep employees safe, working remotely became the new norm and accessing documents remotely became vital.
While having multiple filing cabinets and heaps of paper was sufficient when employees worked in an office, it quickly showed its ineffectiveness when the pandemic struck.
Continue the trend to move your office away from reliance on paper files and documents. With numerous electronic storage options, it’s now cost-effective to move away from paper filing cabinets.
Cloud storage providers ensure your data is secure and easily accessible. And unlike paper filing cabinets, electronic document storage is easily duplicated to create back-up copies.
Having only paper files is risky. With only one copy of documents stored in a cabinet or a box means that if that paper is misplaced or damaged (fires are a real risk these days), you have no back-up copy.
Upgrade Your Accounting and Bookkeeping
With 2021 being the year of flexibility, having an agile accounting team will position your winery for continued success.
If 2020 caused you to reduce your bookkeeping and accounting staff, your business might be at a disadvantage now. If you find your books are not up-to-date or you’re not receiving regular financial reports from your accounting department, you may be operating leaner than you should.
With more uncertainty to come, having timely financial information about your business’s health has never been more critical. When you’re going to need to make decisions quickly in 2021, you’ll need current, accurate financial statements.
But if you’re uncertain about bringing on more employees, outsourced bookkeeping and accounting may be what you need.
With outsourced accounting, you can quickly scale your resources to meet your business needs. You’ll not have to wait to find and hire new staff and train them so they’re up to speed. Your outsourced team can add new members immediately who are already experts in the winery and beverage industry. And if business slows down, you can scale down your outsourced team until business picks back up again.
Outsourcing your accounting can provide immediate expert advisors who can provide guidance and financial direction in uncertain times. While you might think that having industry expert accountants on your team may be a luxury your business can’t afford, the numerous flexible fee options at Protea fit any budget. With professionals with decades of experience in the winery and beverage industry, you’ll receive the specialized knowledge you need with the personalized service you deserve.
Reach out to us today to schedule your initial evaluation, and let us help you take some of the uncertainty out of 2021.