We’re already well into November and that realistically means we should all be preparing for the year ahead. The forecast for 2021 still contains plenty of uncertainty but let’s not forget that opportunities will abound and you want to be ready to cease them.
“It’s fine to celebrate success but more important to heed the lessons of failure”. Bill Gates.
It’s maybe not the year for feasts and celebrations, but an optimistic view into 2021 will serve us well, especially if it inspires us to prepare. In times of uncertainty financial planning is more important than ever, especially if you have become used to relying on Federal Government support (#CEWS, #CERB).
Here are 3 tips to consider when scenario planning for 2021.
1. It takes longer than you think. When planning for 2021, make sure you consider what will happen if each of your assumptions takes 2X – 3X longer than you thought. Depending on your business model this can make a really big difference so make sure you have crunched the numbers with delays in mind. Even if you have customers eager to buy more, your supply chain may take longer, your hiring plans may take longer, you may suffer retention issues that take longer to recover from, and for no other reason it seems that just about everything takes longer in a pandemic.
2. It costs more than you think. Similar to time, entrepreneurs rarely overestimate costs. In most areas of spend (hiring, marketing, travel, etc) there are 10-20% of additional costs that are incurred. Make sure you have leeway in your plan for incurring these unforeseen costing details.
3. Scaling costs more than you think. The costs of acquiring customers actually increases as you scale. The most common reason SaaS companies fail is because they underestimate the rigor and cost of acquiring customers at scale and thus they burn their entire fuel tank before their business takes off. Do your research to understand what you can realistically expect to achieve when planning how you’ll spend your precious cash.
A bonus tip for 2021 is to keep an eye out for opportunities and always keep in mind the chance to pivot, merge, or sell as an alternative-winning outcome.