The Covid-19 pandemic has been difficult to navigate for businesses of all types. The terrain of almost every industry was disrupted with many of these changes expected to be permanent. The uncertainty made it difficult for businesses to budget for the future since it was unclear how long the pandemic-related shutdowns of various local and national economies were going to last. However, now that it appears that the pandemic may be close to being under control and shutdowns are starting to be lifted it may be time for businesses to review their budgets after the smoke has cleared from a year of being in the midst of a global pandemic.
Evaluate performance
One of the first things you should do is to evaluate how your business performed during the pandemic. Look at how the pandemic affected your sales and revenue earned. Of course, many sectors, such as bars and restaurants saw huge drops in sales. However, in some instances revenue and sales increased for some sectors, such as ecommerce. You will need to determine how much the change in revenue and sales will be temporary and how much has been permanently changed.
Capital investments
Many businesses took advantage of forced downtime to make investments in infrastructure to improve their business models. These could have been fixes and improvements that you were too busy to take care of but found the time to do during the shutdown. Now is the time to take a look at these capital investments and determine if you made enough improvements or if you need additional investment in the business model and infrastructure. On the other hand, if you were too strapped for cash during the shutdown to invest, now with a healing economy, you should consider whether or not you want to make these capital investments for the post-pandemic future.
Scenario budgets
Although it may seem that the pandemic and its effects on the economy are beginning to subside significantly, there is still plenty of uncertainty about the future. You should create different budgets for varying potential scenarios that your business may encounter. For instance, you will want to have a customized budget for a sudden spike in Covid-19 infections that force governments to shut down the economy. This will differ from a scenario in which the virus is largely contained, allowing the economy to fully reopen with a vengeance.
Big picture
Of course it is essential that a business owner stays on top of the many details of managing a business. However, it is important to also be aware of the bigger economic picture in order to plan for the future. This can be especially important after surviving a global pandemic which has disrupted supply chains, eliminated competitors and transformed certain aspects of the macroeconomic terrain. You will need to determine what exactly these changes to the economic environment are and how they have and will affect your business in the future. This will allow you to move beyond just simply planning your budget month-to-month and enables you to plan your budget for the next few years and beyond.