Business Planning for 2021

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2020 was a year of survival for many businesses, and as we move to 2021, planning for your business is likely more important than any previous year.

Forecasting for 2021 is complicated by the fact that you are probably looking at a bifurcated year: Pre-vaccine and Post-vaccine.

Based on current projections, vaccines will not become widely available until at least April 2021, and it is possible that production and distribution issues will cause that timeline to slip. However, by the second half of the year, we should see the general population receiving the vaccines, and even Dr. Fauci has opined that by late 2021 the United States will see full stadiums at sporting events; which will also translate to normal capacity at most businesses.


The first months of the year will be dominated by many of the same survival tactics you used in 2020. Expect that until the vaccine is widely distributed retail businesses will ping-pong among different stages of capacity, as in 2020. Areas to consider during this time are:

  1. Inventory – Keep inventory lean. As much as possible stay current with suppliers. Small orders paid on time are better than maintaining a larger inventory and having to stretch terms or payments. Many of your suppliers are probably going through the same hardships; and maintaining strong relationships will build goodwill for the recovery.

Talk to your key suppliers and keep them up to date on your general situation. Most will work with you if they are not blindsided with a crisis.

  • Staffing: Staffing should be matched to the work capacity. If possible, and your employees are willing, use reduced individual hours to keep skilled employees engaged with your business, so you do not have to hire and train when business increases.
  • Outsource: Consider outsourcing back-office operations where possible – human resources, payroll, and many accounting functions can be moved to outside service providers. This also allows you to focus on key priorities and avoid wasted time.
  • Sniper view: What things are you doing in the business that you can defer or drop? For example, many restaurants have moved to reduced menus during this time – dropping items that were nice to have, but not big sellers. What do you have that takes more time and effort than it brings in revenue?

Talk to your CPA or outside accountant; they have an independent view of your business, without emotion. (If you don’t have this resource, consider adding this resource on a contract basis.)

  • Cash: Cash is probably tight, but where you can conserve, do so. Talk to your bank. Like your suppliers, knowing what you are dealing with will make them more able to help, instead of having a crisis dropped on them at the last minute.
  • Marketing: Marketing is often one of the easiest areas to cut, but approach this very carefully. This is almost always trading a little short-term cash relief for a long-term problem. This is one area where you should consider increasing: discounts, coupons for future purchases, loyalty programs, etc.
  • Legal: In addition to the safety protocols related to the pandemic, there are a number of changes in employment laws and regulations in 2021. And there will be employees, customers and others just looking for a payday from businesses that are not in compliance.

Have a Human Resources expert, or employment law attorney, review and update your employee manual and company procedure. A few dollars here can truly save you thousands later.


Once the recovery begins, there will be opportunities for strong growth. Research and planning now will put your company in the position to take advantage of these opportunities in 2021.

For many companies, business has been deferred rather than lost. For many others, the pent-up demand may also lead to explosive growth. Being prepared for this will keep you from losing the growth opportunity, or even failure from the wrong response.

  1. Business model: 2021 will be the year of the blended business model. Many businesses pivoted during 2020 to expand remote operations, including staffing, online sales, delivery, etc. Building a plan to blend in these new processes going forward is key to maximizing profits.

Office space, employee roles, product delivery, outsourced services, all need to be evaluated. New procedures and opportunities from 2020 should be reviewed and finalized where appropriate. For example, restaurants and grocery stores were forced into new or expanded delivery and take-out operations. Those may decline somewhat as people go back to being in-person, but they will stay as a significant sales area from now on, so including a plan for this part of the business is required for these industries. 

How can the lessons of 2020 be used to increase the business in the future – expanded geographical reach, new product markets, new strategic partnerships?

  • Financial Projection: Growth is always stressful as expenses often have to be paid before customers pay you. Having a financial and cash flow projection is key to managing growth and cash.

A good projection will include not only an income statement and balance sheet, but also schedules for when to add staff, equipment capacity, and physical expansion. The cash flow projection will show you how you cash is created and used, and when you need to take on debt or maybe bring on a strategic partner or investor.

Projections are also used to develop and track your key performance indicators – especially how long it takes you to get paid, and how long you have to pay your bills.

Again, talk to your accountant, and your bank. Some banks are realizing that future performance is as important than past history. They will still want to see your financial statements, but a good, realistic, projection will show them how you are going to capitalize on the recovery. (And if your bank is not flexible, consider looking for a new one.)

  • Competition: Which of your competitors prospered or declined in 2020? What did they do right or wrong? Are there opportunities to take over a competitor and grow through expansion? (And if so, do you need to find a strategic partner to help fund the acquisition?)

As we move toward recovery, planning now for the split year that 2021 promises to be will put your business in the best position to take advantage of the opportunities the year will bring.

As an Outsourced CFO, Randy brings over 35 years of experience to his work with privately held companies; building better organizations for growth; and maximizing value for a sale or re-capitalization. He specializes in strategic planning, organizational development, and accounting and finance management services for businesses. His passion is working with Owners/ CEOs/Presidents to maximize enterprise value by sharing his knowledge gained from working with start-ups, growth companies, and turnarounds for over thirty-five years. His role is to build the accounting and support functions to allow the owner to focus on the business, not the back office. Visit RMM Accounting.