Being flexible is an essential attribute for any successful business of any size. However, smaller businesses have a much higher chance of being impacted by changing market forces or unanticipated events. How your business reacts to and recovers from unexpected events is in direct correlation as to how you structure and manage it. The following tips will help improve your businesses resilience and increase your potential for long-term stability.
Your most important aspect of your business is your customer as they generate your income. The best way to protect that income is to diversify your customer base and have more than one revenue stream. You end up exposing your business to risk if you rely on a small number of clients.
Focusing on just a narrow range of paying clients that you may struggling to cope when client numbers drop. Now this isn’t to say, don’t niche, you definitely want to pick a niche; however, you can have several niches. Your time and money should be invested into attracting a healthy pool of clients to lower the impact of a fluctuating client base.
Your staff, much like your customers, are relatively unpredictable variable. You don’t want to have too small of a staff. A focused care of reliable and trustworthy ones is good, but if their numbers drop off thought whatever circumstances, you need to be able to adapt.
Train your staff in multiple, overlapping areas of your business so each can cover the other’s absences, and train new employees as necessary. If one member of your team has a niche knowledge set, you may find them hard to replace when they leave.
Eliminating waste is always a good thing to practice. When business is doing great, we tend to slip into or ignore wild actions. Unfortunately, these bad habits end up carrying over into the less profitable times. Your staff are challenged to break out of their pre-established routines in order to keep a level of efficiency at all times. If your business becomes wasteful, the transition to frugality may be too much for you and your staff to adjust to when it’s necessary by changing market forces.
You need an action plan you can refer to in order to react quickly to an unexpected event. Having an emergency plan for unforeseen events eliminates a lot of mistakes that come about from panicked decision making. Look at each of your staff’s roles and how you’d want them to react to a range of various scenarios before they know their role.
Part of your contingency plan is ensuring you have an emergency cash reserve, so save as much as you can at all times. Create a specific fund (bank account) and add to it as often as you can, so you can pay your bills and fulfill your obligations if revenue streams dry up. Your cash reserve will more than likely be your sole savior of your business when it faces hardship or financial adversity and most successful businesses credit their success to falling back on emergency funds early on in their operational history.
Knowing about an approaching crisis can give you the power to react to it effectively. Educate your staff on the warning signs of potential problems relevant to your business model and ensure there is a clear and effective channel of communication in place so concerns from anywhere in your organization can be conveyed quickly to the people in positions of greater power.
If your staff seem troubled, take their opinions seriously. Your staff as they work in the business everyday are more likely to identify potential problems but, unfortunately, they’re also often the last to be heard. Once you’ve identified an issue early, you have the benefit of being able to be proactive rather than reactive.
The difference between failure and success of your business is knowing how to react when disaster strikes. Your business needs to plan for unforeseen events so as to have a better chance of weathering the storm and coming through the other side as more resilient, healthy and profitable.
Home-based Business? How to Make Your Home Client Friendly
Home-based Business? Some Ideas for Places to Meet Clients Outside Your Home
Should You Pay Yourself Salary or Dividends When You Incorporate Your Business?
What is Income Splitting and How Can it Reduce Your Tax Bill?
Five Common Mistakes That Small Business Owners Should Avoid
Do You Know Why the CRA Uses a Profit Test for Business?
Self Employed? Do You Know What Your Tax Obligations Are?
How Can You Claim Expenses on a Business Loss?