The recent pandemic has impacted millions of small businesses across the nation and has left many wondering what the future holds in store for them. Government programs have helped ease the financial pressure for some but not enough to help every small business owner.
A lot of small firms were caught off guard. In fact, a recent study indicates almost half of all businesses don’t have enough cash reserves to last them more than 6 months.
As we head towards a slow and gradual recovery now is the time to take stock and plan your comeback towards a brighter and better future. Now is the time to rise and shine. Doing so mindfully and strategically to not only survive but thrive in the “new normal.” Whatever that may be.
To help you do just that, Chartered Accountants BrooksCity explain two sure ways you can futureproof your small business going forward.
Have a strong financial management
Having a strong financial management is without doubt the number one thing you can do to futureproof your small business. This is not about hoarding cash but rather being able to adapt to any given situation.
Contrary to popular belief, holding too much cash has a cost of its own. That is the opportunity cost of not investing that money to expand your business. Therefore, not earning a return on your capital.
Instead good management starts with a well-thought out plan. One that takes into consideration different scenarios your business might face and the actions to take in each case. Including the correct amount of cash reserves you should hold.
For example, one scenario could be that your sales return back to a normal level right away. Another scenario sees for a 30-50% below normal in the first few months as the economic machine starts working again. Last, a “doomsday” scenario, what if we are hit with another wave and you’re faced with a 75% drop or no sales for another 3 months.
Having a solid plan and sound understanding of your finances will allow you to not only weather any storm but also take advantage of opportunities that come as a result of chaos itself.
Build a culture of innovation
When it comes to innovation many small business owners fret at the idea of change and the old adage of “we’ve always done it this way” holds strong. Although change is synonymous with innovation you don’t have to reinvent the wheel to innovate in your small business.
Your end goal shouldn’t just be about survival but rather improving the way you can serve your customers and your community best. By doing so you will be able to differentiate yourself from your competition and have a stronger presence in the marketplace.
Here are two areas where you can look to innovate in your small business.
Product and Service Innovation
You might have heard the stories; a distiller now making hand sanitizer or a car manufacturer now making respirators. As consumption habits change it’s important to think of what your customers might demand in the future.
Sometimes it could be as simple as moving your operations online, like giving online classes for example. Other times it might require a more drastic change. The important part is to stay alert so you can be prepared for any shifts.
Your process has to do with how you operate your business, anything from the way you serve customers to how you source your products or deliver your service.
Prior to the recent pandemic, a lot of employers were reluctant to embrace working from home. Yet, now it’s the new normal. In fact, a recent study shows working from home can increase productivity by 47%.
In conclusion, if you want to innovate it’s important to always keep an eye out for how you can improve the way you do things. Adopting methods, you would have not otherwise considered can also create paradigm shifts and open up your small business to a better reality.