Creating a more robust business – part 1
Recently we wrote about what’s beginning to emerge as a bit of an elephant in the corner of the economy’s room – recession. But as was mentioned in that blog post, there are a number of recession safeguards that you can put in place now to be better prepared if or, now looking more probably, when a recession hits.
Today, we’ll look at what you, as a business owner, can put in place now that could create buffers or recession safeguards against what might be ahead.
Recession safeguards for online and retail businesses
If your business is an online business, you’ve likely had some good growth over the last couple of years (thanks to Covid’s wild ride). However you’ve probably also had your fair share of supply chain issues and increasing costs, that have perhaps left your bottom line a little slimmer than you might have liked. And in turn, that might leave you more vulnerable than necessary. What can you do to best plan for a downturn?
- Think about your product line – could it withstand a recession? Are you selling necessities or basics that will still be required if Australia tightens its collective belt – such as socks, jocks, health items, auto parts, coffee and tea? Or better yet, research also tells us that when belts require tightening, apparently we don’t like to go without small luxuries. These include cheap and cheerful pet toys, hobby items, baby items, books, lipstick and other relatively cheap grooming items, on trend (yet longer lasting) clothing items or accessories. So knowing that, think about what you could add to your product line to maintain your revenue or bring in added recession dollars.
- Consider your supply chain costs and sourcing locally. In the last 6-12 months, supply chain costs have increased very significantly, especially if you’re shipping via containers from overseas. Friends with online businesses tell me that they’re investigating whether local manufacturing might be cheaper and/or quicker and/or just less angst inducing. However, in a recession, what goes around, comes around and that might mean sourcing closer to home. Particularly if your brand can claim contributing jobs to the economy there’s likely to be a brand boost in it for you too.
Recession safeguards for B2B or professional services businesses
If a recession does come, one of the best ways to minimise its impact on your revenue and your staff is to ensure you’ve got a steady supply of projects in the business at any point in time (both now and into the future). The best way to safeguard your cashflow is to ensure the following;
- Build a robust sales pipeline starting now. If you run a B2B or professional services business, think about how you can shore up your new business pipeline via a daily habit of reaching out to business contacts and business prospects. You don’t need to do a 10 calls at 10am (like a couple of people I know), but you do need to do something new-business-esque, each day. The more you do, the fuller (and more resilient) your pipeline, the better the chance of new business continuing to come through the door if tougher times do come your way. Oh, and an added side benefit, should you ever want to sell your business (or have it better operate without you), this is a critical box to be able to tick. And a second side benefit, if you’re currently advertising your business (and waiting for business to come to you), you can likely scale that back as you and your team will be finding a greater proportion of new business. Anything else that comes in is gravy. Win-win!
- Build your networks. The bigger your professional network (and no, I’m not just talking LinkedIn here), the better. Think of it this way – everyone you meet could potentially be a client, a partner, a supplier, new staff member or refer you business. They could even share with you a tip they’ve learned that might save you thousands of dollars moving forward. Find a way to get out and about more often – start now before you really need those connections. Seek first to help them too if you can.
Recession safeguards for service businesses such as hospitality
- Broaden out your service offering. Do you have a room in your premises that’s not really used often – only for overflow, which almost never happens? Maybe it’s full of boxes. But with a bit of organisation, might you be able to turn that into a co-working space? Or a meditation space? Or maybe even an art or writing space? If you’ve got folks that are renting that space that’s x cups of coffee you don’t have to make to break even (and there’s an added benefit that those folks might just be a coffee/lunch as well whilst they’re there).
- Go luxe – if you’re a cafe owner and you’ve got a spare space, why not decorate it and use it for meetings at specific times. Think a breakfast networking meeting, or a dinner time private birthday event. Or board meetings/interviews.
- Focus in on a specific type of customer. Have you noticed your business is frequented by a specific group of customers? Maybe they come in at a specific time? Why not make that their time and create some kind of ‘special’ that makes it more inviting for them (and their friends). It might be entrepreneurs coming in the mornings until 11am to pound out some work. Or maybe it might be mothers’ groups. Think about what can you do to make your cafe/space more appealing to mums and their little kids? Could you create a little kids play corner. Or could you have a true ‘littlies’ menu. Maybe it’s dog owners or book clubs. Whoever your people are (and it could be a couple of different folks at different times/day) cater to them in a way that makes them feel special.
Whilst I’ve used a cafe as an example, you could absolutely do something similar, if you’re prepared to think outside the box, if you’ve got under utilised time/space as a hairdresser, art gallery, etc. Send out flyers launching your new offer to surrounding businesses, to your local Chamber, etc.
Next post, we’ll cover building up a financial emergency buffer as recession safeguards because, after all, forewarned is forearmed against economic shocks – however they come about.
Of course, if we can help you better manage your business planning or your business/personal tax affairs, you can call us on 6023 1700 or connect with us via Facebook or LinkedIn.
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