Wow!! Can you believe 2020 is almost coming to an end?!
We usually start reflecting on the goals we set out at the beginning of the year and see how much we got done. Some of us will feel great, some of us might end up in disbelief while others didn’t know what hit them! As we are getting closer to ending the year, we try to accomplish as much as we can in the time left. Yet, don’t be so hard on yourself, 2020 has been a unique year! So many things happened this year (and it’s not over yet!!) that future generations might need an entire history book just to describe 2020. Some probably saw those challenges as problems, but others might have seen them as opportunities to grow. For the remaining time of this year, let’s focus on how we can finish strong and give the most and best of ourselves!
As December 31st looms around the corner, many businesses are also taking action. It’s that time of the year of taking inventory, closing books, planning for next year and so on. It is important to elaborate a flexible plan for the future and do as much as you can today to help your business stay afloat with all the uncertainties that lay ahead.
Act today to get the most of what’s left of the year!
Consider some of the following to help yourself or your organization:
Tax planning – Talk with your accountant or CPA about what you can do these last couple of weeks to take advantage of tax laws. In previous years, businesses might have considered stocking up on supplies or paying down debt, but with COVID 19 some may consider doing these things next year because doing so next year could be more beneficial tax-wise. Don’t forget the PPP loan forgiveness or other programs out there.
Pricing – There are different ways to determine a price. In construction there is the stipulated sum method, the cost plus method and the unit price method as ways to establish price. Consider your goals and determine if the pricing model you are currently using is the best one suited for your business. They all have advantages and disadvantages, so choose one that adapts better to your organization and our constantly changing world. For example, if you didn’t factor in material price increases into a stipulated sum contract, ask your attorney about an escalation clause to factor in those price fluctuations or consider another pricing method. On the other hand, consider locking in today’s prices if you expect increases in the future. At the end, select what helps you reach your business goals.
Planning and Budgeting for what may come.
Here are some recommendations that can help you plan to reach your goals for 2021:
Plan strategically – This is important since it provides us our current position and where we would like to be. Consider what are the goals that you and your organization wish to accomplish in the short and long run. Is it expanding to new markets, increasing market share or focusing on a niche? Maybe it is a good time to revisit the business plan and see if we have stayed in line with the mission and vision of the organization
Plan tactically – With the strategy, we know where we are going, but do we know how to get there? Which are the most important goals we want to make sure we hit? Let’s prioritize goals (a SWOT analysis can come handy here), create a schedule of the things we need to do to accomplish those goals, determine how we will know when we are hitting those goals (KPI, ratios, deadlines, etc) and assess modifying the plan to better adapt in order to stay on track
Budget – Having a clear direction of where we are going and knowing how to get there, are probably the most important steps, but do we have the resources to make it happen? It’s a very good idea to assess what resources we have available at hand and how we can make up for a shortfall in areas that are lacking. Here are some important factors to consider when budgeting:
Income sources – Do you have one income source or multiple? How reliable and solid is the relationship with this income source? Is there a high chance of default? With the whole COVID 19 situation happening, some places of business have had to reconsider their ways of doing business (work from home, no dine-ins, only curbside pick up, etc). Unfortunately, others have had to close their doors temporarily or permanently. If your income source relies on some of these businesses, it is important to take this into account.
Expenses – How much do you spend in order to keep things running and to achieve the goals you set out? Are there areas that need to be reconsidered that aren’t pulling their weight? Are you factoring in increases and decreases in price or supply? The culprit for scarcity in certain goods and the increase in price for construction materials was, you guessed right, COVID 19. The construction industry saw an increase of 30%, in some cases, for things like lumber and steel. Not only this, but many businesses needed to incorporate PPE in order to conduct business, which was an unforeseen expense. Ultimately, know your expenses and be prepared for unexpected changes in them.
Credit and other debt – We have all heard the term “good debt and bad debt”, right? It comes down to if the debt (loans, lines of credit, credit cards, etc) are helping you to get where you aim to be without having to sacrifice too much in the process. If the answer is yes, then we could consider it good debt, but if you are bogged down with big payments, high interest rates, penalties, etc chewing up your profit, then chances are this is bad debt. When considering debt, ask yourself if this will allow me to be in a better financial situation or not? Will this be a temporary thing and will I have the means to repay it or will you rely on debt on a constant basis to stay afloat?
Whether we are near December or starting January, it’s always good to know where we stand and where we want to go, to make the best out of every situation and do the best we can. Here at Nortex GC Inc we can help you plan for your Commercial Remodeling needs for the remainder of the year or for the upcoming 2021. We can work with your goals, timeframe and budget to help you reach your goals. And remember, finish strong!!
References:
https://trentcotney.com/construction/what-are-escalation-clauses-in-construction-contracts/
https://www.accountingtoday.com/news/new-twists-in-year-end-tax-planning
https://www.daveramsey.com/blog/the-truth-about-budgeting
https://www.relevance.com/7-strategies-that-companies-are-employing-to-increase-market-share-2/
https://onstrategyhq.com/resources/strategic-planning-process-basics/