Business planning for small business retail has been turned on its head as a result of COVID-19. The old process is no longer relevant. Models used in the past are not relevant. Category trajectories have changed. Economic models have changed.
Not only is has data changed, the modelling / planning processes have changed.
Developing a plan for a retail business is harder and easier than ever. And, yes, I think both positions can be true in the current unique situation.
It is harder because past performance is less relevant, trajectories have sharply changed.
It is easier because it’s like we have a clean slate, because we can make of it what we will, because we can pivot – now is a perfect time to pivot.
Unfortunately, banks, Tabcorp and other organisations that ask for business plans are less likely to get it. They want the plans in the old way, following the old, and outdated, path of laying our plans and predicting outcomes. I think those old approaches are a waste of time.
For what’s next, for the immediate future, for the rest of 2020 and into 2021, I think newsagents need to be 100% focussed on these points operationally and in terms of planning:
- Liquidity. Cash is king. Hoard cash. Be frugal on overheads. Stock what sells and sells quickly. Drive GP%. If you have loans, reduce them as much as possible.
- Inventory efficiency. Quit everything that is not selling. Remove bloat from your inventory. Dead stock is dead cash, now more than ever.
- Awareness. Be more aware than ever before about what if happening in your area physically as well as online. Be sure you are equipped to spot trends.
- Test outside your border. Try new products and new geographic areas.
- Online. Be there. Be engaged. Focus on shoppers who will never shop your physical shop.
- Be ready to pivot. This is key. be nimble and ready to embrace a change that presents, even if it is temporary. Temporary opportunities can be highly profitable.
These are some of the factors I’d build into a business plan for a newsagency if I was doing one – even though they are not the points of a plan as such. Also, the plan would only speak to the next six months.
Are you talking about potential new owners providing business plans or is there a requirement for existing owners to provide an updated business plan? I guess banks are going to want a predictable plan to accompany predictable loan repayments.
I am aware of banks requiring business plans as well as Tabcorp, some landlords and some suppliers.
Banks, Suppliers (most industry, especially National bodies request or require a Business Planand S.W.O.T. plus nalysis as well as a three year Cash Flow projected spreadsheet.) i.e. the Lotto, Major control supplied Card companies, Magazine Distributor/publisher now just the mag Publisher and some Landlords in major complexes.
Accountants are requesting up to 3 years BAS statements as well as P&l’s plus Banks request Balance sheets even if the purchaser is not buying the Company shares. There are sounf reasons for tthis.
I agree Mark. Change is blowing in the wind and now is definitely the time to revisit our business plans. Many businesses are and we too need to plan and adapt to changes in both market demand and behaviour and in our supply chain. Most importantly we need to own and invest in our own business plans.
Business plans for compliance sake are all but worthless. Personally I think it would be more useful for franchisors and wholesale suppliers to provide us with their business plans rather than the other way round as is currently the case!
Whilst important business plans need to more than about just finance and cashflow.
Any revenue projections for the near future would have to be extremely conservative for retail. Commission revenue for Lotto based on historical figures would be reliable for forecasting with say 10% reduction built-in to be conservative. For retail sales it’s a big unknown especially when stimulus cuts out. The Job’er payments and lesser extent redundancy payments and reduced competition in some areas from shops being closed are distorting the state of things for those currently trading.
The one thing that is easier to forecast is expenses, for some rent is a huge fixed cost that has proved hard to reduce in the past. The only major expense, aside from good stock control, that some can reduce to counteract a decline in revenue is wages but even that has a fixed cost. However if you can show a finance provider that if it comes to it you can reduce expenses to cover repayments, they’ll give it more weight than a best guess revenue forecast.
A diversified newsagent that was profitable before and has room to cut expenses has a better chance than more specialised shops of seeing the other side.
Steve,
Some business plans are mundain meaningless and routine tick the boxes. However others make the applicant think about what they are buying and more to the point what they are going to mean to the supplier or servicer i find the old and true S.W.O.T. analysis as good today as it was 40 years ago.
i agree with the cash flow concern for most of it is just conjecture and basically B.S. as especially nowadays forecasting increases (which is all they want to see) is basically only related to the business plan and the capital expenditure improvement one can envisage.
Actually most of it is false for the spread sheets issued for completion do not complete with addition or fulfilment of enterprise reality. For example what one wants to achive with the goals are not matched with the reality of capex in any real investment within the cash flow statement .
Anyway it satifies the algorisms of ticking the boxes.
I’ll repeat myself:
For what’s next, for the immediate future, for the rest of 2020 and into 2021, I think newsagents need to be 100% focussed on these points operationally and in terms of planning:
Liquidity. Cash is king. Hoard cash. Be frugal on overheads. Stock what sells and sells quickly. Drive GP%. If you have loans, reduce them as much as possible.
Inventory efficiency. Quit everything that is not selling. Remove bloat from your inventory. Dead stock is dead cash, now more than ever.
Awareness. Be more aware than ever before about what if happening in your area physically as well as online. Be sure you are equipped to spot trends.
Test outside your border. Try new products and new geographic areas.
Online. Be there. Be engaged. Focus on shoppers who will never shop your physical shop.
Be ready to pivot. This is key. be nimble and ready to embrace a change that presents, even if it is temporary. Temporary opportunities can be highly profitable.
These are some of the factors I’d build into a business plan for a newsagency if I was doing one – even though they are not the points of a plan as such. Also, the plan would only speak to the next six months.
Totally agree with this focus.
The post was about Business plans and major industry players requesting a Business Plan.
I believe your suggestions to be far more fruitful and beneficial for the store operator. You may add to this store presentation -clear pricing included and stock knowledge with staff assistance for purchase-especially Gifts/Cards. i would include them in the Business Plan as the plan is compulsory for new entrants and it will aware them of what is important for good retailing rather than the discipline required to meet a criteria.