business plan ideas for pandemic

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Start » startup, starting over how to write a business plan for a post-pandemic world.

The future is still unpredictable, which is why building flexibility into your business plan is critical.

By one estimate, more than 100,000 small businesses have shut permanently since the pandemic hit earlier this year. Many of these business owners are selling their companies and retiring early, but other merchants will look for their next challenge: a business that can thrive in a post-pandemic world.

If you’re among the many merchants looking to restart, it can be difficult to write a business plan when so many things are still unpredictable. Here are some tips that can help you build flexibility into your business plan and attract investors by thinking strategically about the future.

[Read more: How to Start a Business After COVID-19 ]

Build a "future-back" vision

A business plan typically lays out a strategy or a road map for how your venture will serve customers, investors and key stakeholders with product or service. While the elevator pitch stays high-level, the plan should be detailed enough to recruit investors to back your company.

Before you get into these strategic details, Mark Johnson, co-founder of Innosight told Harvard Business Review , start with the vision. “Vision is getting you out in that five to 10-year horizon of what you could and should be, not just about the way things are today, to seize on those opportunities that can develop well past your core. The strategy is how you get there in terms of the choices you make,” said Johnson.

Johnson recommends spending 10–20% of your leadership time developing a “future-back” vision that can then be translated into a business strategy. Think beyond the next two years to five and 10 years into the future. This vision should be the inspiration for how you move forward, a shift in mindset that can pull you and your team out of survival mode into creatively thinking about where consumer trends may lead.

As part of this exercise, try considering some of these questions :

• How will life change for consumers in five to 10 years?
• What will supply chains look like?
• What will the competition look like in your specific market?
• What skills will your team need to make this vision a reality?
• What decisions do you need to make now in order to achieve this vision?

Work backward from your vision to create a strategy that will lead to long-term success, rather than exclusively focusing on the present.

[Read more: Business Ideas That Will Emerge Out of the Pandemic ]

"The pandemic has given you and your team the opportunity to transform for a more turbulent world."

James Allen, partner, Bain & Company

Practice agile business planning

Once you’re able to shift your mindset, it’s time to build that vision into a strategic business plan. Chris Perfect, owner and principal consultant at Concept and Perspective, LLC , recommends taking a different approach to writing a business plan fora post-pandemic world.

“The traditional approach to business planning is to produce a detailed document setting out 'what, where, for whom and why' of the company's business, along with market data and a financial plan,” said Perfect. “The approach of agile business planning is to simplify how business planning is done by focusing on a small number of key objectives, sharing those widely and using technology to really push forward with implementation.”

The agile approach leads to a living document that is shared and updated regularly, allowing the business to evolve and respond to shifting market conditions flexibly and with accountability. Perfect recommends to start with five to seven high-level objectives that are critical to the growth of your new business. Then, create a hierarchy of tasks and initiatives and then specific actions necessary to achieve those.

“Assign responsibility (defining timeline and budget where appropriate) for each task, but empower those responsible to be flexible and creative as to how they achieve the task,” said Perfect. “Governance is also really important to enable flexibility. Establish a regular cadence of reviewing the business's progress and be ready to change, add or push-out/pull forward the implementation date of key tasks.”

The team you have to implement your agile business plan is critical to the success of your vision.

Transform from the inside out

Asa report by consulting firm Bain & Company warns, “Companies that hurry back to old ways of working may very well stumble in the decade to come. The pandemic has given you and your team the opportunity to transform for a more turbulent world.”

Bain’s report goes on to predict that successful post-pandemic businesses will be defined by their partnerships, rather than assets or products. Perfect agrees.

“It's all about the team. Many merchants make the mistake of not putting sufficient emphasis on the business's 'human capital': who is going to drive the business forward, develop products and services or build external relations,” he said.

Share your future-back vision with your team to inspire, motivate and engage employees around what’s possible. Then, assign different pieces of your plan to team members to create a sense of ownership and accountability. This will help your new business go the distance in our post-pandemic world.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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How to Create a Winning Post-Pandemic Business Model

• Jonathan Byrnes

Lessons from six companies that used market insights to transform.

Markets change, and business models have to change in parallel. Success depends on constant business model innovation. In order to succeed, you need to get two things right: You have to target a defensible market segment, and you have to create a business model that enables you to win against competitors who are going after your target segment. In developing a high-profit business model to engage your target customers, you have two basic choices: (1) increase your customer value, or (2) lower your cost to serve (or do both). The author discusses six companies that have generated high sustained profits by targeting specific profit segments with innovative business models that either increased customer value or reduced cost to serve.

In order for your company to succeed in the post-pandemic era, you must do two things well: Select your strategy carefully to target a defensible market segment and tailor your business model to capture and dominate your target market.

The problem is, most companies aren’t ready to compete on these new terms. The pandemic sharply accelerated market fragmentation. This allowed the digital giants, fueled by their market micro-segmentation, to grow quickly, but most companies have not changed their business model to meet these new conditions. Many managers who rose through the ranks in the previous era simply assumed that their age-old, tried-and-true, broad-market business models were still effective. Financial analysts continued to evaluate companies based on sales growth and expense minimization, reinforcing the problem.

In developing a high-profit business model to engage your target customers, you have two basic choices: (1) increase your customer value, or (2) lower your cost to serve (or do both). This is complicated by the need to transition from the previous broad market targeting to the new segment-specific targeting.

The starting point in determining a new business model is to clarify your company’s current profit segmentation. As we’ve written about before , when companies use new, granular, transaction-based metrics and analytics (creating an all-in P&L for every invoice line), they can quickly see that their customers fall into three broad profit segments: “Profit peaks,” their high-revenue, high-profit customers (typically about 20% of the customers that generate 150% of their profits); “profit drains,” their high-revenue, low-profit/loss customers (typically about 30% of the customers that erode about 50% of these profits); and “profit deserts,” their low-revenue, low-profit customers that produce minimal profit but consume about 50% of the company’s resources.  

Understanding Midsize Businesses

A company can shape its new business model to target any of its profit segments, although it’s extremely difficult to engage more than one. The following companies have generated high sustained profits by targeting specific profit segments with innovative business models that either increased customer value or reduced cost to serve.

Profit Peak Customers

Increased value..

Several years ago, GE’s aircraft engine division had an insight that transformed its industry. In the past, the company had sold engines, spare parts, and services largely on a standalone basis. Each segment was increasingly vulnerable to price competition from focused niche competitors.

GE executives’ breakthrough was understanding that their airline customers really wanted airplanes that flew flawlessly, and not the components that enabled this to happen. In response, they developed a new business model, OnPoint , sold as “power by the hour.” The airline doesn’t pay for the engines, but rather for the time they’re flying. Now the engine manufacturer has a strong incentive to improve the reliability of its engines, but also strong leverage to push out third-party maintenance providers. GE essentially eliminated its competitors by redefining its industry, and in the process, GE’s aviation line of business became one of its fastest-growing segments. (Covid largely shut down the industry, but this high growth is expected to resume as the pandemic is brought under control.)

Lower cost.

Swagelok produces flow control devices. Its Silicon Valley division had two main customer segments: University laboratories and semiconductor fabrication plants. The university labs had high gross margins, and the semiconductor fabs had low gross margins, so the sales force favored the labs.

When the company started using transaction-based profit metrics, they were astonished to find that the labs had low net profit, while the fabs had high net profit. The lab problem was that every order was for a different experiment, which required a lot engineering time and generated a lot of returns. The fabs, on the other hand, issued standard year-long blanket orders that required virtually no additional cost. In response, the company decided to accelerate its fab sales, and, on the lab side, to hire and train graduate students in each university to advise the researchers on product selection, virtually eliminating its engineering cost and returns. Profits soared.

Profit Drain Customers

Nalco produces and distributes chemicals for water treatment systems. The company’s commodity products were coming under price pressure from competitors. Nalco decided to install wireless monitors in customers’ chemical tanks that enabled them to read the chemical draw-down. This information enabled Nalco to lower delivery costs, and they also found that it allowed them to reduce manufacturing costs.

However, Nalco’s managers had a critical insight: By monitoring the actual rate of chemical draw-down and comparing it to the rate that the system would have if it were running efficiently, they could determine if a customer’s system had operating problems. When they saw a problem, they alerted the customer’s engineers.

Since the cost of a poorly running system was many times the cost of the chemicals, Nalco became a crucial strategic partner, and once they had placed monitors in customers’ tanks and established close working relationships with customers’ engineers, they had first-mover advantages that the competitors couldn’t overcome. The price wars disappeared.

Taggart Brothers (not its actual name) is a retailer of consumer electronic products. When managers conducted a transaction-based profit analysis, they discovered that about half of the company’s profits were eroded by its lowest-sales stores in the last quarter of its seasonal product life cycle.

When managers investigated further, they discovered that the problem was not that the store managers were writing down the old products at the end of the cycle, but instead that they were postponing putting these products on sale in the hope that a sales surge would materialize. This prevented them from stocking their shelves with new products at the peak of the introductory selling season. This was the real source of the profit drains.

When they contacted the distribution center, the replenishment managers explained that their end-of-life cycle store restocking policy was to ship products to stores according to historical demand until the warehouse ran out of stock. The high-volume stores could sell these products, but in the low-volume stores, they were clogging the shelves. The answer was simple and costless: Curtail shipments to the low-volume stores a month before stopping shipments to the higher-volume stores. Profits went through the roof.

Profit Desert Customers

SKF is a manufacturer and distributor of bearings. Its OEM business dominated its sales, while its aftermarket business was lagging. In response, company leaders created a new aftermarket division. The new aftermarket manager saw that the division had two very different segments.

The industrial aftermarket provided bearings for machines, while the automotive aftermarket sold bearings to car repairers. The industrial aftermarket customers needed to minimize machine downtime for bearing replacement, while the automotive aftermarket customers needed to determine the right bearing for the job and acquire the instructions and accessories needed to do the work.

In response, the management team developed maintenance kits (including sealants and cleaners) for the industrial customers in order to extend bearing life. For the automotive customers, they developed hundreds of job-specific kits, which included parts, tools, accessories, and instructions. Profits rose by double digits.

Pacific Distributors (also not its real name) distributes beer, wine, and other beverages. When managers looked at their transaction-based profit metrics, they were pleased to see that their high-selling anchor brands (e.g., Budweiser, Miller) had low gross margins but high profits. But they were shocked to find that their high-gross margin, fast-growing craft beers were losing money.

They immediately assumed that the problem was that they delivered daily to large retailers. When they looked more closely, however, they found that their numerous small customers — the corner grocery and convenience stores — were causing the loss. The problem was that Pacific was delivering several times per week to each small store. While the high-volume anchor brands generated enough gross margin dollars to pay for the picking and delivery costs, the low-volume craft beers had picking and delivery costs that far exceeded the gross margin dollars (even though the gross margin was a high percent of revenue).

When they asked the sales reps why they were delivering so often, the reps responded that they had great service: Every order was shipped the next day. When the managers asked why they were taking so many orders, the reps responded that their sales managers were controlled by how many orders the reps took each day, so they scrambled to take as many orders as possible. By simply taking two orders per week instead of three, the whole segment flipped into high profit.

Right Segment, Right Business Model

When markets change, you have to rethink your strategic positioning and business model. In the post-pandemic period, this is a life-or-death need. As we said before, in order to succeed, you need to get two things right: You have to target a defensible market segment, and you have to create a business model that enables you to win against competitors who are going after your target segment.

Above all, you have to choose your customers, saying no to those who don’t fit. And you have to create an innovative, high-profit business model based on providing your target customers with more customer value or lower cost to serve (or both).

The lesson from Amazon’s success is not that it targeted customers that everyone else missed. It’s that Amazon, along with the other digital giants, targeted the small customer market segment that everyone else already had — the other companies had failed to subject these customers to intensive innovation. Amazon, on the other hand, constructed a comprehensive, winning business model to capture the segment and stayed focused on relentlessly improving it.

Markets change, and business models have to change in parallel. Success depends on constant business model innovation. By keeping a steady focus on targeting the right segment with the right business model, you’ll create years of profitable growth.

• JB Jonathan Byrnes is a senior lecturer at MIT and founder and chairman of Profit Isle, a SaaS profit analytics software company. Jonathan is coauthor of the recently published book, Choose Your Customer: How to Compete Against the Digital Giants and Thrive .
• JW John Wass is CEO of Profit Isle and former SVP of Staples. John is coauthor of the recently published book, Choose Your Customer: How to Compete Against the Digital Giants and Thrive .

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