How fluid is your business plan?
You would feel for anyone who had just completed a business plan to support a new business venture or loan application in late February or early March. In a matter of days around the middle of the month, many businesses will have seen their hard thought through plans disintegrate in front of their eyes.
Just at the moment there would seem to be three types of outcomes:
- Some sectors have disappeared overnight and will take time to come back
- Some businesses are even busier than before and now struggle to cope, either because demand has increased, or supplies have disappeared
- Others are carrying on pretty much as before, but in a different way with staff working from home or at a safe distance from each other.
In the early days of the lockdown it was fascinating to see many business pivot and change their established business model almost overnight. This could be distilleries now putting all their efforts into producing bottles of sanitizer or pubs and restaurants swiftly moving to a home delivery model. These changes were unlikely to have featured in their published business plans, so what has happened here? Firstly, they have not been tied and frozen to their original plans. Secondly, they have promptly looked at their resources and capabilities and compared these to what is being demanded in the market. Finally, they have made new plans and put them into action with incredible speed.
Further challenges will come when the lockdown ends and we get back to a new normal, as it’s likely that plans will need to be re-done. Some pubs who have pivoted and started home deliveries are finding that they are doing so well that they might not re-open the pub. Distilleries are probably thinking more expansively about their product lines. There are probably another three likely outcomes in the future:
- The smart or lucky businesses who have not been too disrupted will be well positioned for the upturn and will do even better
- Some impacted businesses are not going to be able to survive, either through choice or because the bank did not have the confidence to give even a Government backed loan.
- Other badly impacted businesses may be able to borrow to get back but those that do not recover quickly will be handicapped for many years to come. Some are already realising that they will be at a disadvantage compared to a clean start up.
Yes, all businesses should be taking the current disruption as an opportunity to re-assess their current plans and consider whether they are fit for the new normal, but at the moment we can only guess as to what that will look like. You can spend time looking at scenarios now while things may be quiet, but it’s not going be worth locking in plans and making big investments in the future until we have a lot more clarity.
If you would like to discuss the topics explored in this article, please contact us.
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