This year, business forecasting will look notably different compared to years past. Typically, we have twelve months of legitimate numbers and a good idea of what to expect in the year to come. Of course, heading into 2021 isn’t as simple; we’re coming off of the hardest year yet with little knowledge about what lies ahead.
However, that’s no excuse to skip your annual evaluation and forecasting; in fact, it’s even more prudent this year so you can plan ahead for whatever may come. When the future is uncertain, business owners must double down in their planning in order to proactively approach any situation that arises.
Here’s what you can do to forecast for 2021, even if there’s no way to predict what the year will bring.
Think of it like a spectrum.
Savvy industry professionals understand that an uncertain future spells out risk, even if their businesses are optimized for success. That’s why a big part of risk management is identifying potential obstacles and preparing a plan for each. When it comes to 2021, it’s best to see it like a spectrum of outcomes so you can approach any situation proactively.
Revisit your data from 2019 and prior to get a grasp on how your business was performing prior to the pandemic. Create a projection for how your business would be if it continued that trend and consider this the best-case scenario. Then, review data from 2020 and estimate how your numbers would look if it continued as it is right now—this can serve as your worst-case scenario. Using these two possibilities as the ends of your 2021 spectrum, you can plan for most situations that come your way and everything that falls in between.
Factor in unique opportunities and threats.
The market has shifted due to the pandemic and, as a result, businesses have had to adapt their policies and operations to meet expectations accordingly. For example, couples are choosing to shrink their guest lists and transition to micro-weddings—how will this affect your business? What feedback have you heard from clients in regards to safety measures?
There’s no denying that the industry landscape will look vastly different in 2021 as we attempt to recover and rebuild. What has felt strange and novel in 2020 will become accepted as commonplace, so consider how these changes will influence the way you do business.
Be realistic in goal-setting.
If you run a business, you probably make a point to set SMART goals every year (as you should!). However, in 2021, the ‘R’ will be of particular importance. It’s critical to go into the goal-setting process with realistic ideas in mind. We would certainly all like to triple our revenue, but that’s not a very likely outcome. Be honest with yourself about the situation at hand and allow yourself some grace. If your goals seem a bit more humble this year, that’s completely fine—in fact, it’s the smartest thing you can do.
Of course, if you’re heading into Q2 or Q3 and things are looking better than expected, you can always adjust your goals to be more ambitious for the rest of the year. However, at this point in time, it’s best to keep it reasonable; otherwise, you may set yourself up for failure if you’re pushing yourself to reach further than reality allows. Modest goals will push you to remain motivated and committed to making progress, which is ultimately what we all must do in 2021.
When your goals are established upon realistic business forecasting, you can rest easy knowing that you’re prepared for any opportunities or obstacles along the way. However, it’s important to understand that forecasting is not meant to be a precise science. Instead, it’s simply a way to think ahead and safeguard your business based on your current knowledge of the situation at hand. Circumstances will change and there will surely be unexpected developments, but you’ll be in a much better place to take them on if you’ve done the planning work ahead of time.