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7 Ways Small Business Financial Planning Will Change in 2022

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    No matter what industry you’re in, 2020 was a difficult year for business. Whether you had to change from in-person to online sales, saw a surge in customer demand or had fewer sales due to COVID, business changed. As you're looking ahead to 2022, your financial planning should also change.

    While the basic tenants may be the same year to year, our newfound lessons over the past year should inform your financial priorities. You need a strong idea of where you're going and what you need financially to keep your business going during any sort of unforeseen events. According to the experts, here are seven ways your small business financial planning will change in 2022.

    1. Emergency Reserves Will Be a Top Priority

    Perhaps one of the most important things a business could have done to survive the pandemic of 2020 was to have an emergency fund. According to the Federal Reserve's 2020 Small Business Credit Survey, 66 percent of companies faced cash flow challenges over the last 12 months. Having money in the bank to cover payroll and operating expenses for a few months can keep your business afloat during hard times and safeguard your personal money you may be tempted to dip into.

    Graham Davies, founder of Addition, a London-based accounting firm, shares: “Given that a significant downturn is currently being experienced, we wouldn’t expect many businesses to still have 3–6 months in reserve, but businesses should start planning to build those reserves up again so that when the next crisis comes (as it always does!), they are as prepared as possible.”

    The best way to get started is to open a business bank account and set up automated deposits each month or each week to put a specific amount of money away. By transferring money automatically, you'll ensure the task is actually completed and you likely won't even notice the money is gone. As you do your financial planning for 2022, earmark the amount from your budget that will go into your savings account each month.

    2. Expensive Debt Needs to Be Refinanced

    Taking out loans was a reality for many businesses over the last year. But debt can be a drain on your business. High interest rates on loans or credit cards can mean little progress on paying your borrowed amount back. Reducing the amount of money spent on interest and your principal each month could put a significant amount back in your pocket and reduce your borrowed debt faster. “Businesses should look to refinance any expensive loans they may have with banks and other lenders, for cheaper, perhaps longer-term loans to de-risk the company financially,” suggests Graham. “Government-backed lending could be a way to do this. It is also worth exploring grant funding and tax credits as this could be a smart way to increase your financial strength.”

    Many small business loan interest rates dropped during the pandemic. Talk to your lender to see if you can take advantage of these lower rates.

    3. Growth Will Come from Operating with Less

    One of the bonuses of the pandemic is that small businesses have learned to operate in an emergency situation. “Businesses have actually worked so hard to survive the pandemic and they now know how to sustain their business with limited resources,” says Donna Tang, budgeting expert at CreditDonkey, a personal finance site.

    This lesson can be used to rebound your small business into growth. Continue operating as if you have limited resources to build up your cash reserves and savings. Then, those reserves can be used to grow your business. “Planning for growth will allow businesses to use their resources wisely now to save for investments in 2022,” says Donna. “Every small business has suffered a lot during the pandemic and didn’t get any chance to grow. They have an opportunity to grow in the coming year, and should plan for that in the best possible way.”

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    4. A Long-Term Focus Is Required for Sustainability

    Many businesses make the mistake of financial planning for the short term. According to Christian Brim, found of Core Group, you want to get out of that short-term mindset. “Businesses that want to grow profitably have to first be intentional, not reactive.”

    When small issues arise and business owners are called to put out daily fires, they become focused on the short term. When you’re focused on the short term, you aren’t looking ahead and planning for the future. John Berry, CEO of Berry Law, agrees with this: “With a forward-looking focus, the financial plan allows the business owner to see what expenditures are needed to keep the company on a growth track and stay ahead of competitors."

    5. Financial Planning Will Consider Every Scenario

    Financial planning is intimidating to many small business owners because they worry about getting it “wrong.” That’s why Graham suggests planning for multiple futures. “As a business owner or senior manager, it is key to plan for all likely scenarios. Here are a few scenarios worth modeling for 2022:

    • Everything goes back to how it was in 2019
    • New strain of COVID resulting in further lockdowns
    • Hyper-inflation (as a result of government support programs)
    • High levels of unemployment negatively impacting consumer spending”

    By planning for any possible scenario, you can avoid the fear of “getting it wrong” and can pivot as need be. Many business strategies for growth and reinvestment can work towards multiple futures, giving you a win-win situation.

    6. Spending Will Be Geared Towards the New Normal

    The year 2020 and COVID changed customer expectations, and most forecasters agree that these changes will remain permanently. They want a seamless online shopping experience, the ability to do curbside pickup, delivery options and increased access to contact your business on social media, chat and email. When financial planning for your small business, you need to think about how you can creatively reinvest in your business to support those changes. Consider putting your money and spending where these new trends are leading us.

    Donna suggests investing in the customer experience. “According to my knowledge, customers will rush to their favorite brands and businesses and will expect to be treated and welcomed better than they used to be treated before the pandemic. If small businesses don’t meet the expectations of their customers, they will be at a great loss.”

    The pandemic also altered how we work. Eighty-three percent of employers found that remote work was successful for their business during the pandemic. Small business owners need to look at how they can reinvest in their employees. For example, David Bitton, co-founder and CMO at DoorLoop, suggests “a budget for a digital workplace upgrade might be prioritized over other things for the next year since companies have now realized how much of a necessity having a digital workplace is.”

    7. Risk-Taking Will Be Welcomed

    With all the changes brought about by the pandemic, it’s the perfect time to try something new. While businesses may have felt forced to pivot and shift their products and services during 2020, this flexibility can be a boon to your business in the future. “Being open-minded here will be the key to being able to adapt to a new environment,” says Graham. “Now might be a good time to test that new product with the market, so that you can hit the ground running in 2022.” When you lead your business with curiosity and an open mind, you’re more able to adapt to changes and are more ready to try new things. You never know, that crazy idea that’s been brewing just might be the next big thing for your business.

    The COVID pandemic changed the way we do business, from how we work to how we interact with customers. Some of those changes will remain a part of small business life, even after things have returned to normal. Recognizing those changes, rebuilding your emergency savings and planning for multiple scenarios are just a few expert-recommended ways to create a financial plan for your small business in 2022.

    Page Grossman

    Page Grossman

    Page is a freelance content marketing writer with experience writing about small business, the future of the workplace and health. She also operates a weekly email newsletter where she shares advice on living an authentic, intentional life. When not writing, you can find Page traveling, fostering older cats and working as a sexual assault advocate.


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