I’m sure you already know how this article begins: these are challenging times and the impacts are reverberating across industries. We’ve been inundated with news about the short- and long-term effects of the COVID-19 pandemic, and it bears repeating that 2020 has been a rollercoaster for businesses across the U.S.

Pandemic response shifting from short-term to long-term

The past months have taught us that businesses owners are resilient and many are rising to the occasion by pivoting their business model, caring for their workforce and being thoughtful about operations. In the beginning stages of the COVID response, we saw a lot of focus on liquidity and cash flow management, not to mention the cascade of counsel needed to wade through legislation changes and relief packages. Then, businesses were patching together plans to stay afloat and creating workarounds to get them through for the short-term.

But this storm hasn’t passed yet, and owner-operators need more strategic plans for staying agile in the face of uncertainty. With 2021 around the corner, businesses are busy reviewing financial plans and analyzing risk models for what could still be on the horizon.

The power of nimble business models

When you made your 2020 business finance plan, I bet it didn’t include tripling your cleaning supply budget, moving your workforce to remote-only, or transitioning from a brick-and-mortar operation to ecommerce. For years, we’ve read the reports heralding the digital transformation of business, but the recent health crisis accelerated that change to lightspeed levels.

According to a September 2020 Statista report, seated diners in restaurants have declined 43.77% compared to last year, but that doesn’t mean there isn’t a way to capture sales in this new era. We’ve seen our clients in the food industry pivot to online ordering, takeout and curbside pickup models, and adapting in-person seating to accommodate physical distancing guidelines. We’ve also seen retailer clients quickly convert a portion of the business online, overhaul their approach to inventory, and shift product mix to meet the unique demands of the pandemic world. In April 2020, Deloitte noted that ecommerce sales had already grown 68% year-over-year, with a 25-35% growth expected through the holiday season.

Flexibility and adaptability have always been important for businesses, and today’s environment simply highlights how we need to evolve quickly, strategically and with an eye on the long-term.

How pandemic expenses may change your 2021 financial plan

From the early days of the pandemic, businesses pivoted to accommodate physical distancing and health protocols, demands for personal protective equipment (PPE) and continuing to serve customers without face-to-face interactions. Now, looking at your 2021 business budget, consider bolstering these areas to help you stay prepared for whatever may be ahead.

• Technology – Digital business demands are almost overpowering at this point with the need for businesses to transition online, even in industries traditionally reliant on in-person experiences. Operational expenses related to remote workforce management, launching websites and ecommerce hubs, and adapting to digital payment demands can strain your bottom line. Prepare for continued expenses in digitizing your business operations.

• Business continuity planning – This year certainly put the spotlight on how well business continuity and disaster response plans are structured. As we risk model for worst-case scenarios, it’s likely you’ll need to allocate more budget to workforce safety and productivity, supply chain challenges, legislation and regulation changes, online systems and client care initiatives.

• Sanitation and safety – Cleaning and safety may have been a standard portion of your business budget for years but has likely grown to an unprecedented amount. Businesses will need dollars set aside to refurbish and retro-fit workspaces, retail environments and processes to accommodate the need for physical separation. Not to mention the increased budget for PPE and cleaning supplies.

Business financing can be nimble, too

In the coming months, normalcy may start to return to business operations, but the same may not occur as quickly for business financing. The impacts of major changes to monetary policy in the aftermath of the pandemic may have longer effects on business financing, including tighter credit restrictions and less appetite for lending risk. More than ever, it will be important to find a financial partner willing to do more than just look at your numbers—find one that will look at your potential, consider your experience and history, and work with you to adapt to the challenges facing businesses today.

Consider consulting with a banker who can brainstorm creative ways to restructure debt, leverage liquidity and optimize your balance sheet. Previously, an annual financial review and budgeting season may have been your standard, but with uncertainty at the helm, many companies may benefit from recalibrating throughout the year. Financial creativity can be a critical tool during volatile times – just as operational creativity and nimble business models have served many businesses well during this year of shake-ups.

A final note: keep your eyes on the horizon

It’s likely you’ve already made substantial changes to your business plans this year in reaction to the pandemic. Some industries are seeing fast-paced growth—like transportation and technology services—which has created space for innovation and expansion. As you look ahead, consider where you may have opportunities to evolve your model and strengthen your plan for the long-term, whether it’s M&A, digital transformation or restructuring your debt and balance sheet. Business planning for 2021 will rely heavily on the ability to adapt, so keep your eyes forward.


Adam McDiarmid is executive vice president and executive director of the Business Banking division at UMB Bank. In this role, he is responsible for the implementation of the division’s strategic business plan across the footprint, including portfolio growth, performance quality and managing day-to-day operations. He has more than 17 years of experience in the financial services industry. He earned a bachelor’s degree in business from the University of South Carolina.