Setting your business up to be resilient amongst change is a proactive measure to help navigate hardships such as:
Here’s some ways you may build resilience in your business:
Depending on a single product or service can be a risky strategy in an economic downturn. Consider expanding your product or service offerings, exploring new markets, or partnering with other businesses to increase your revenue streams.
Many businesses pivoted during the pandemic and came up with creative ways to serve a new customer base. Similar thinking is required during a pandemic. Think about new products, low cost packages or more basic versions of your current offerings and see how they can be integrated into your business model.
It depends on your business, but if you can offer subscriptions or ask your clients to sign contracts to work with you on an ongoing basis, you’ll have steadier income and better control of your business finances. Offering a small discount in return for a commitment of a year or more can give you more certainty.
Acquiring new customers can be more challenging in times of hardship and more expensive than holding onto existing ones. Focus on creating loyalty among your customer base by offering exceptional customer service and personalising experiences where possible.
Consider implementing customer loyalty programs, offering promotions and engaging with your customers in a meaningful way. This will give you a foundation of loyal buyers who are more likely to stick with you when times are tough.
Insolvency Australia spoke about how cash reserves are dwindling for many organisations. If you can take steps to cut costs now, you can begin to improve or restock your emergency fund.
Many businesses have what’s referred to as ‘long tail’ costs. These are small but can add up. An independent reviewer may be able to identify areas where you can save. If you divert the money to a rainy day account, you can build a buffer against difficult economic times.
Risk management is important for every business. You can work with a specialist risk manager to identify what risks may impact your business and help you create action plans for alternative scenarios. It’s also a good idea to catch up with your accountant to run the figures and figure out how much money you will need to stay afloat if revenue drops.
As a number of high-profile brands have demonstrated over the years, businesses can go insolvent, even when they are making money. If you want to protect your business, it is so important to manage cash flow and stay on top of commitments and debt (tax included) so you can avoid having your suppliers taking legal action against you.
During times of downturn and inflation, it’s better to know exactly what financial position you are in, rather than looking at decent sales figures and assuming this means you don’t have to worry.
Speak to your accountant to understand your position and talk through some potential scenarios today.
AFS & Associates are your partners in providing peace of mind. Get in touch if you would like some more advice about how to strengthen your business.