It’s no secret that times have been tough for a record number of businesses across the world in the wake of the global pandemic.
For business owners in every country, the question of continuity has been a big one over the last 18 months. Running a successful business is already challenging enough — but throw an unforeseen set of factors into the mix and many entrepreneurs find themselves navigating uncharted territory more now than ever before.
So, how do you keep your business succeeding in tough times?
Are there practical steps you can take to keep your business running in the black no matter what’s happening in the world?
The answer yes — and it’s far simpler than you might think.
What if we told you that business success was easy, even in tough times like these?
Would you believe us? It’s true! Even in tough times like these, there are simple steps you can take to keep your business running like a well-oiled machine. Want to know what they are, then read on to discover the exact steps you need to take to ensure your business thrives, no matter what the world throws at it.
Before we dive into our ‘this-seems way too easy’ guide to business continuity and succeeding in tough times, let’s have a quick word about risk.”
If you would like to skip ahead and talk to me personally about how you can ensure business continuity than reach out and book a call with me today!
A word about risk
At every stage in the game, risk management is a concern for small to medium (SME) business owners. And while each business is unique, we’ve found that business owners of all shapes and sizes have common experiences and share common concerns.
As a business owner, it’s easy to believe that you have a viable level of control over external factors that affect your business. You might be confident that you’re adequately managing your risks — even though this may not actually be the case.
Risk management can be a literal minefield littered with unforeseen circumstances and surprises around every corner. And while there is no ‘one-size-fits-all’ solution, the starting point is for business owners to identify and prioritise the risks that affect their business.
Risks can develop quickly and unpredictably, even if your business operations are riding an even keel in the black. It’s not always safe to assume that the status quo is a given, and your business’s operating conditions are always subject to significant impact — even in periods of success.
For instance, take the global pandemic.
Who would have guessed that in the space of a few weeks, we’d witness the lockdown of entire countries, suspension of stock markets, international travel bans and massive market volatility. It’s a testament to just how interconnected we are as a world and how vulnerable our economies really are.
Success in our ever-evolving, modern world means more than just embracing change — it means understanding and managing the broader risks that come with running a business. And knowing just how quickly you’ll have to duck and dodge. That’s why we offer a risk assessment, so you can identify potential threats before they become a reality.
So, what are some reliable, foolproof ways to circumvent risk within your business?
Here are a few tried-and-tested tips we highly recommend:.
What do all the best athletes, entrepreneurs, and business people in the world have in common?
They’ll all tell you that when it comes to minimising risk, it is crucial to move quickly.
You may be thinking, “Alright, duly noted — but what is the first real step I can take to set this in motion?”
We hear you.
Many SMEs are looking for solutions, ways to lighten their load — but they can’t do it alone. Especially during uncertain times, SME business owners need the added support of a trusted business advisor.
A rising number of SMEs are being overwhelmed with surmounting challenges and increasing pressures facing their businesses, with a staggering 61% of SMEs reporting a high (29%) or very high (32%) degree of owner reliance, according to our 2021 SME Report. The silver lining: business owners can alleviate the pressures behind these numbers simply by bringing in an advisory professional.
And while profit margins and bottom lines are what SME business owners scrutinise most, the support provided by a trusted adviser goes well beyond looking at the numbers.
Looking at the numbers is important for any small to medium sized business owner, but it’s not the be-all and end-all. Your chartered accountant or business adviser should also provide support that looks beyond the bottom line.
They should be working with you to examine your business plan year after year, and make sure that it’s still relevant or achievable for your company’s needs; they should be helping to identify potential threats & opportunities as well as provide guidance on how best overcome any challenges faced along this path- all while looking out three years from now too!
If you’re not working with a chartered accountant or business advisor who is helping you set goals and giving you either monthly or quarterly guidance on how to reach them, then it might be time for a change.
At Insight CA, we believe that quarterly or monthly support is essential for keeping your business on track. It’s a great place to start, and a relatively small step that might just inch you closer to a successful outcome.
Don’t make the mistake of hiring an accountant only on price, as I say in my book Starting a Business Growing a Business “If you think it is expensive to hire an expert, wait until you hire an amateur”.
Just because an accountant is cheap, doesn’t mean they’re good. In fact, you could be doing more damage to your business than you think. A qualified chartered accountant will help you grow your business and protect your bottom line.
Click here to find out more about our services and how we can help you achieve your goals.
Don’t make the mistake of waiting. Procrastination can work against you when you’re dealing with risks like volatile markets and global economic concerns.
What is your current situation and how is your business planning for the future? After a careful assessment, you may find that it’s time to scrap your current regime and start fresh.
Another thing to remember: advice can go a longer way than you think.
Both independent and objective advice (from qualified and experienced professionals, of course) can help you to curtail risk and position your business for long-term success.
And it can ultimately mean the difference between your business thriving or simply surviving.
The bottom line: throw everything at the wall and see what sticks. When times are tough, it can’t hurt to gather as much knowledge and information as possible. Having more information at your disposal will enable you to pick and choose which practical applications work for your business’s specific situation.
To help you quickly assess existing risks within your business that may be affecting your profitability, check out our handy Risk Survey, a diagnostic tool designed to help you benchmark your company against the industry.
Protect your best assets
Have you got a few select clients that are really your bread and butter?
It turns out that those high value customers are more important now than ever before.
As times change, so does your B2B and B2C dynamic. Rapid and unpredictable change on the global stage will likely shift how each and every one of your clients does business. For you, it’s about being there to accommodate that constant influx of change in your clients’ situation.
And to foster trust in the process.
Make contact. Reach out to your highest grossing customers to remind them what’s on your services menu and that you’re there to offer your continued support.
Even more good news: this slice of high ticket clients likely makes up just a small fraction of your overall customer base, so this process shouldn’t be too time-consuming.
Checking in often will help to establish a rapport with your most valuable clients, who are likely grasping for a helping hand now more than ever.
Protect these key relationships and you’ll construct a safety net that can not only carry you through tough times but also pave the way for more potential business down the line.
Reduce your costs
When times are tough, you’ll need to rethink many aspects of your business. And it may be time to take a systematic approach.
Perform a cost-benefit analysis. Place your current assets under the microscope. Are your fixed costs as low as they could be? How many variable costs does your business handle each month? Have you got any unnecessary expenses floating around under the radar?
For doing business in tough times, you’ll want to keep your fixed costs low. Try to eliminate any superfluous or extraneous expenses that don’t ultimately increase profitability, like non-trading costs.
Variable costs, on the other hand, could work in your favour. Investigate ways to migrate your business’s expenses from fixed to variable. Outsourcing is often an effective variable cost strategy.
For some valuable guidance about improving your business’s performance, check out our 2021 SME Report, a comprehensive guide for curtailing risks and optimising your business in the current climate.
Take care of your own
Did you know that you can use periods of risk as opportunities to touch base with your staff?
It doesn’t stop at keeping your highest-grossing clients warm.
So, go ahead — give your staff some added incentives to remain with your company. Is there a holiday coming up where your employees could use a day off to do some shopping? Do you have a few star employees that deserve some recognition to boost morale?
Ask yourself: why not take a human approach when dealing with your staff? This can go a lot further than you might think — and keep your best and brightest from jumping ship.
Simply put: increase morale and you’ll also increase employee retention. The two are directly proportional.
Highlighting achievements within your team is actually one of the smartest moves you can make as a business owner, and it costs you absolutely nothing. Employees who feel seen, heard, and recognised will often make efforts to maintain consistency, synergise with other employees, and generally work happier. And as the old adage suggests, happier workers work harder.
Taking care of your own is a simple, low-cost, and effective way to keep your business strong and strengthen your bottom line.
Because at the end of the day, your high-profile customers aren’t your only asset — your staff is the behind-the-scenes driver of these key business connections.
Collecting cash from your customers in these tough times may prove more difficult than it used to be.
Watch your cash flow carefully. You may even consider amending your policies to focus more on debtor collection and stock management.
This means placing tighter limits on the amount of credit you extend to your customers.
And if you have exposure to large customers, it may be time to obtain some assurances or guarantees about how they will pay their account. Speak with their accounts payable or billing departments to make sure a concrete, ironclad arrangement is in place.
Follow up on your largest customer accounts before they become overdue. This practice will insulate you from having to chase down your highest grossing customers later.
Be proactive. Take decisive action in a predictive way — rather than a reactionary way.
We recently worked alongside one client who thought no-one could do this task better than him; however after discussing how much time he had available each week, he quickly realised this was leading to a decline in cash flow in the business, because in his words he, ” just doesn’t have the time.”
A lot of business owners try to do everything themselves. They think that they are the only ones who can do tasks the right way and that delegating work will make their business suffer. However, this way of thinking can actually lead to a decline in productivity and cash flow.
When business owners try to take on too much work, they end up spreading themselves thin and not being able to focus on any one task. This can lead to mistakes being made and tasks not being completed properly.
It is important to learn how to delegate work in order to protect your business. By outsourcing tasks such as book keeping to your chartered accountant like our client did, you can ensure that they will do the job properly and efficiently. This will free up your time so that you can focus on more important aspects of your business.
Letting go of the need to control every aspect of your business can be difficult, but it is essential for ensuring its success. If you would like to talk to us about our book keeping services, then please book a call you will be glad you did!
But what about investing?
We’re glad you asked.
Keep your stock ordering proportional to customer sales. If your sales are falling, lean out your investment strategy and take fewer liberties than you ordinarily might.
Desperate times call for desperate measures, so trim the fat by exercising a bit more frugality during uncertain times. This will allow you to save capital for when markets bounce back to better numbers.
Remember: if your customers’ tendencies, spending habits, and general behaviours are trailing in a certain direction, you must adjust course to suit. Trends within your own customer pool are usually good indicators of what’s on the horizon — so act accordingly.
Hiding in plain sight
Risk isn’t always external, and it doesn’t always look so obvious. It often hides in plain sight — and it could be lurking between the lines in your own company.
And the answer goes far beyond HR.
Before you take a gander at restructuring your internal job structure, we urge you to reconsider reducing your staff or eliminating job roles from within your company. Cutting your workforce scarcely solves long-term expenditure issues — and it could leave you shorthanded (and vulnerable) once market fluctuations die down.
A viable solution? Perhaps some of your existing employees could learn how to multi-skill to increase their per-hour employee returns.
We think it goes without saying that as a business owner, you must be prepared to make some hard decisions — especially during tough times. Multi-purposing your already existing staff, while challenging, could be one of the smartest plays to make sure you’re better prepared to face ongoing external risks.
Remember: tough times don’t necessarily call for staff reduction!
Risk, meet Reward.
A precariously wise man once said, “There can be no reward without risk.”
And while we are inclined to agree, we think that risk can and should be curtailed at every opportunity.
When you implement the simple, effective, and low cost strategies we’ve outlined in this guide, you’ll find that risk transforms into reward. And that reward is the impenetrable continuity of your business.
Want to know more?
If you’d like to speak to someone about mitigating risk and keeping your business running successfully in these tough times, get in contact with us today to organise a free, no obligation chat. We will listen and formulate the best strategies to help you achieve your goals. If you are also looking for an accountant in Auckland to do work for you, please reach out. Alternatively, click on the Book A Call button now to get started.
You know they’re important but have you ever wondered why exactly your cash flow and financial reports are such a big deal? If so, we recommend you read this next article.
Are you struggling to make your business work?
Insight CA Limited is a team of experienced Auckland-based chartered accountants and business advisors who can help. We’ll give you the power to see what’s really happening in your business, so you can take control and start making progress. Click here to learn more about how we can help you achieve your goals.