We may be on the verge of a new business awakening as vaccine numbers rise and pent-up consumer demand unfolds.
What the experts say:
Nationally: The Livingston Survey is projecting a 2.9 percent annualized growth over the first half of 2021 and a 3.7 percent growth rate in the second half of the year. They forecast a steadily decreasing unemployment rate from 6.7 percent in December 2020 to 5.5 percent in December 2021.
Locally: The Metropolitan Milwaukee Association of Commerce’s (MMAC) quarterly Business Outlook Survey provides these insights:
- 70 percent of businesses surveyed foresee real sales increases in 2021
- 88 percent of metro-area companies see business operations back to normal sometime in 2021
Are you ready?
As we are coming out of winter hibernation, it’s time to prepare your organization to take advantage of a potential business boom. We don’t know exactly how big or how long that business surge will be, but one thing is for sure – you need to be ready, willing, and able to serve your customers, which means looking around the corner. Possibly even stepping around it!
To prepare for a surge in growth, there are three areas business leadership should give serious consideration:
- Cash Flow
- Supply Chain
Capacity planning involves looking at the maximum amount of sales you can take with the existing resources. Take a look at how your current capacity aligns with what it was a year or two ago, pre-COVID-19. Predict where you expect your best growth potential to be and take a critical look at whether you can meet the anticipated demand in those areas.
- Do I have the ability to add people? How quickly can I do that?
- Do I have the equipment to service those sales?
- Do I have the people to service those sales?
- How long will it take to hire and make those people productive?
- Do I make shifts in products or services to more profitable vs. less profitable based on demand?
Creating capacity requires capital, so let’s move on to a discussion on cash flow planning.
Know your cash flow
Through the pandemic, some businesses were in protection mode and some had an increase in activity. If you were in protection mode, switching to a growth mode will be a mental challenge but if you can see the growth and capture it, you should be rewarded with a more substantial business. It is time to move from a “protect your business” mode to an “I’m ready to grow” mentality.
- Start with a cash flow analysis which looks at cash coming in (collected sales) and money going out (payroll, equipment, rent, fixed costs, and variable costs).
- Initially in a growth phase, the cash going out will be greater than the money coming in but, at some point, that should stabilize and then reverse course.
- If possible, prepare weekly forecasting data. This information will help you evaluate if additional funds will be needed and for how long.
- It will be vital that you first develop a realistic scenario for your business and then plan for the effort and focus it will take to make that forecast a reality.
Understand your supply chain
Managing your supply chain might be more complex now than it was a year ago.
- Are your most frequently used vendors able to meet your demand?
- How at risk are you if that supply chain is disrupted?
- Should you be looking for additional sources?
- Where does your company fit in the supply chain?
Your supply chain is the most critical element in delivering timely products and services and, in turn, your ability to grow. Spend some time analyzing this area of your business.
Be proactive and accept the challenge
As you take a critical look at your operations, you will need to balance customer service, operational capability, and your organization’s financial picture. Lean on your advisors to help you develop a focused strategy for 2021, but don’t wait. Be ready for the challenges ahead with a proactive approach and a critical look at your business potential.
Looking for more inspiration? Download our newest eGuide: Creating Business Resilience: 6 Ways to Impact Your Bottom Line