by Rob Joseph, Director, BeaconCFO Plus
As the new year approaches, many businesses are eager for 2020 to fade away into the days of auld lang syne. While you might wish 2020, the pandemic, and the havoc it wreaked on your numbers in the last year could simply disappear at the stroke of midnight on December 31st, the simple truth is that it won’t. However, there are steps you can take now to ease your company’s transition from a rough 2020 to a brighter and more successful new year.
Package the bad in 2020.
If possible, delay shipments to the beginning of the new year. Front-load payments to maximize tax deductions. Maintain a low 2020 Q4 forecast so that you can launch into 2021 with a more successful Q1. Ensure your business has a strong third-party risk assessment strategy and backup plans in place to protect business continuity should any of your essential suppliers fall through due to COVID-19-related bankruptcy.
Protect cash flow and liquidity.
We’ve said it before: Knowing your numbers is critical to running your business at a profit. This was especially true for businesses during the initial COVID-19 disruption. 2021 will demand small businesses, in particular, to keep a close watch on their cash flow to inform their decision-making. If you understand when your numbers are trending up or down, you can react quickly and respond immediately.
Plan for recovery.
While we aren’t living in a “post-COVID world” quite yet, we will be one day soon. Do you have a sound financial strategy in place to guide your business to recovery? If you do not have an in-house CFO, consider outsourcing the services of a part-time CFO to help drive strategic scenario planning for your organization. An experienced CFO will use his industry knowledge and expertise to model and forecast a variety of future scenarios, helping you better prepare for whatever 2021 throws your way. A financial professional’s advocacy could be the difference in helping your business navigate, and survive, a potentially tumultuous Q1 or Q2 in 2021.
If you would like professional insights and guidance specific to your business, please reach out to schedule a consultation with one of our highly experienced virtual CFOs. We’re here to help you position your business for greater success in 2021—let’s leave the bad in 2020.