Xero recently published their Top 10 Business Trends for 2021 and I wanted to share a few highlights with you.
2020 was a year. Businesses faced some of the biggest and strangest challenges. Those that thrived during Covid (and there were many) showed some of that Kiwi ingenuity we are so proud of. ‘Pivot’ became a key word. As did resilience!
Whilst we hope for an easier, less bumpy 2021, Xero expects many of the lessons learned (the hard way) in 2020 to stick around - and so do we!
Cashflow Forecasting
We’ve talked about it a lot here on the blog, and we will continue to do so. Because 2020 proved just how critical a cash flow forecast is for businesses - with 70% of business owners saying they experienced cash flow difficulties in 2020.
A cash flow forecast plots projected income and expenses on a timeline to show when money shortages are coming. And that ability to see around corners came in really handy in 2020, as revenues dipped and fixed costs stayed mostly fixed.
As a result, cash flow tools were the most-searched for item in Xero’s app marketplace in March and April. And we accountants say they’ll stay in vogue for the foreseeable future.
Cash flow and strong forecasting pulled businesses through Covid and lockdown last year. Continuing this practice is paramount moving into 2021. If 2020 taught us anything, it is that we truly need to be prepared for anything.
Contingency Funds
Contingency became more than a line in a budget this year. It was the difference between survival and closure for many businesses.
It helped businesses ride out the drop in sales that happened when we all went into lockdown. And it was needed again when businesses were expected to transform operations, take sales online, and introduce new health and safety measures.
But not every business had the cash cushion they would have liked during Covid. That’s hardly surprising though, it is hard to sit on a stash of money. We business owners generally prefer to put our profits back to work in our business on expansion or extra marketing.
So if having a contingency fund is to remain an important business trend, the natural question is – how big should it be? The precise amount really depends on your business but we advise months, not weeks.
Business Relationships
Businesses relied a lot on the goodwill of suppliers, customers, and employees in 2020. During and after lockdown our team of 5 Million cut each other slack on bills, worked hard to fill orders, and rallied around peers and competitors alike. It was a nice reminder that there are people at the heart of businesses.
Kindness and goodwill aren’t very business-y sounding business trends. But Xero did some research to discover just how important that stuff really is. The answers might just surprise you:
• 93% of consumers say they’d buy more from (and recommend) a business that showed empathy toward the community.
• 69% said they feel proud of local small businesses.
(Forrester study, 2020)
That goes to show why ‘support local’ has become such a rallying cry.
Being Online
Ecommerce has been the next big thing since back in the early 2000s. But plenty of kiwi businesses still didn’t have a huge need for it. That is until they were unable to open and their customers were in lockdown at home.
During lockdown, up to 58% of customer spend happened online. And businesses said online sales accounted for 12% more revenue than normal (Forrester study, 2020).
Meanwhile, more than a quarter of businesses have reported that online marketing was their main strategy for getting through the downturn.
Having an online presence was obviously a great way to reach customers during lockdown, and Xero strongly feel it is going to remain so. Many customers like the ease of shopping online and not having to go into a store for their purchase and online shops are a lot easier to build than they used to be (think drag-and-drop) So if you aren’t already online, be sure to look into it!
Continuity Planning
Business continuity plans were always the right thing to do, but who of us business owners ever really had the time? (or inclination) Not many. Then March 2020 came around and suddenly lots of people started fitting it into their schedule. Google searches for ‘business continuity plan’ leapt 600% year on year.
As the name suggests, a business continuity plan is a set of strategies to help you power on through a disruption. That disruption might be the loss of a key customer, or supplier; a fire, flood, or recession; or, say, a global pandemic.
Business continuity planning sounds heavy, but with templates and guidance it doesn’t have to be! There are many examples of businesses who adapted quickly to what happened this year. Having a process for assessing and responding to a crisis can certainly help with that. That’s why continuity planning will probably stay top of mind for a while.
If you want advice on or help with any of these trends we are here just drop us a line, give me a call on 027 444 8993 or book a meeting via Facebook.
Head over to Xero to read the other 5 which includes remote working and workplace flexibility, pivoting, flexible payments and embracing technology.
