Aaron Smyle started Smyle and Associates, LLC in order to make a difference in the lives of others by offering his expertise in the areas of taxation and compliance. Those looking for both a personalized and an educational experience will be served by his commitment and dedication to the craft.
Many breweries are heading into the new year with a lot of fear and uncertainty. Amid the COVID-19 pandemic, a struggling economy and a new presidential administration, planning for the coming year is much more complicated than in years past. Nobody knows how long it will take for the virus to get under control or what’s in store for business owners. Against that backdrop, businesses are preparing for the worst but hoping for the best.
Thousands of business owners have shut their doors for good during the pandemic, and surviving businesses need to plan without a clear idea of what life will look like and when more-normal times might return. Budgeting in the current environment may seem futile, but it’s an important part of preparing for your business’s future. Acknowledging next year will be different is the first step in budgeting for 2021. There was nothing normal in 2020 and we can expect more uncertainty 2021.
How to plan your 2021 budget
Planning your budget for the next 12 months amid a pandemic and a teetering economy can be difficult, but it’s not impossible. Ask yourself key questions about your business performance and be realistic about the answers. The pandemic hit everyone differently depending on their industry and their ability to pivot and adapt. As such, some businesses can plan for growth in 2021, while others need to remain conservative with their forecasting.
Create scenario budgets
The key to a successful budget is having enough cash flow (cash is king!) That’s particularly important in 2021, as forecasting with so many uncertainties requires creativity and discipline. Scenario budgeting allows you to think about what your cash flow looks like and if you need more funding and how to get it.
Take a big-picture view of your brewery
For many small breweries, budgeting is all about the minutiae and the margins. It gives you the opportunity to plan the financial details of the business on a month-to-month or year-to-year basis, and that helps you plan inventory, pricing and cash flow. A budget should also include a big-picture view of your business. Attaching your budget to your growth drivers, whether it’s getting more customers or having existing customers buy more, will aid you in reaching those goals.
If 2020 has taught us anything, it’s to expect the unexpected. Small business owners who plan for different scenarios will be in a better position to weather the storm than those who skip planning and budgeting or stick to “business as usual”. The biggest piece of advice is that nothing is set in stone for 2021, you’ve got to be 100% adaptable and be able to adjust on the fly in order to take advantage of the ever changing environment that we are in.
