Why You Should Update Your Budget and Forecasts in the Age of Coronavirus
People are naturally pretty nervous right now. As business owners, we all face uncertainty about what the future holds. Some businesses will be tempted to hunker down and do their best to ride out these unpredictable times.
That’s a perfectly normal response and I wouldn’t blame anyone for focusing on self-preservation. After all, protecting ourselves and our families is a natural human instinct.
But, while uncertainty can be frightening and stressful, it can also be a time of great opportunity. While some business owners will be paralyzed by fear, others will see this as a time to innovate or even start a new business.
Challenging times are the perfect opportunity to pivot to new ways of thinking and new ways of doing things. It is more important than ever to shift our minds from problems to opportunities. We have opportunities not only to help our families and communities stay safe but to grow and make changes in our lives and our businesses.
The instructor who leads a fitness class I take always says, “If it doesn’t challenge you, it doesn’t change you.” This is true now more than ever and applies to our businesses as much as it does to work out. A new challenge is an opportunity to look for new approaches and make changes, especially when keeping the status quo isn’t an option.
Things you can do right now in the face of new challenges
We are a business planning company, after all, so we are reviewing our sales and marketing plans and making adjustments. We’re also reviewing our budgets carefully.
Most importantly, we’re creating different financial forecast scenarios to explore what our business will look like with different levels of sales. With these different scenarios, we can then look at our expense budget and make decisions about where we might want to invest and where we might want to cut.
When the future is uncertain, creating different financial forecasts helps us prepare for different possibilities. Having a plan helps us know ahead of time what we’ll do depending on what does or doesn’t happen. We won’t have to panic and rush to make changes. Instead, we’ll be able to follow our plan.
Of course, we’re also tracking our actual results compared to our plan. Are we meeting sales goals and staying on budget? To do this, we use LivePlan’s business dashboard so we don’t have to spend time creating any reports. We can just log in and immediately see how we’re doing.
Creating a financial plan is one of the most important things you can do for your business right now. It’s important to not just react blindly, but have a plan for what you’re going to do.
Resources that can help you plan and forecast
Of course, we recommend using a tool like LivePlan to make the budgeting and forecasting simple. But we’ve also got plenty of other free resources to help you:
Sales Forecast Template Download: Use our free Excel template to work on your sales forecast. If you’re starting or running a subscription or SaaS business, we have a template for that too.
Income Statement (P&L) Download: Another free Excel template that will help you create an expense budget and measure your profitability.
Cash Flow Template Download: Forecasting your cash flow is important when your business situation changes. If you’re going to face a cash crunch, plan for it and get financing or an SBA-backed loan in place sooner rather than later.
A simple one-page business plan template: If you have an idea for a new business, use this simple one-page template to plan out your idea. It’s much easier and faster than a traditional business plan.
There will be an end to all of this. It may be hard to see the light at the end of the tunnel right now, but it will be there. The people that step up to the current challenges and make changes, or even start something new, will be best positioned to excel.