Prior to the COVID-19 pandemic, many business owners may have thought they were well prepared for any disasters, only to be proven wrong, very quickly. Loss of supply chains and revenue, reducing hours or laying off staff, all of these issues have become commonplace. Downturns and profit losses, however, don’t have to be the result of a pandemic; market changes, loss of suppliers, and increasing rents can all lead to dwindling profits.
So if your business has struggled over the past few months, what can you do to future-proof your business against these types of losses? What can you do right now to turn your business around? Whether caused by the current global pandemic or something completely different, how can you make sure that your business never has to struggle to pay its bills again?
1. Review your marketing strategies
Have your marketing strategies produced the results you anticipated before the disaster struck? How can you update these strategies to move your business forward today? Should you explore social media marketing or sponsored ads? What strategies are your competition using that could leveraged for your company? Developing a range of marketing strategies for both good and bad times can help your business weather the current storm.
2. Optimise your cash flow
With reduced sales, your cash flow decreases accordingly. To breathe life back into your cash flow you can focus on collecting all outstanding debts, reducing standing stock, and replacing slow moving stock with stock that sells faster. You can also sell some of your assets to improve your cash flow and promote products with a high profit margin.
3. Focus on your customer base
Does your business rely on a small number of big customers? If so, expanding your customer base will help your business weather the loss of one or more of these big customers. You can also diversify your range of products so that they appeal to a larger customer base. Increasing customer loyalty by running incentive programs, competitions, and offering discounts for products with high margins (so you still make a good profit) are other options to consider.
4. Communicate with your employees
When business has taken a downturn, it’s always wise to keep your employees informed of what’s happening. Asking staff for innovative solutions may result in new directions or strategies for your business, whilst involving staff in decision-making can often turn a business around very quickly. Job sharing and reduced hours may well be sufficient to get you back on your feet, but if staff need to be temporarily laid off, at least they know that you did your best.
5. Reassess your lease arrangements
Leases are often one of your largest expenses and can quickly become a serious liability if your revenue plummets. So it pays to reassess your leases and opt for short term rather than long term commitments. This way you can move to smaller premises and reduce your fixed costs or even consider co-working spaces, if you have a small staff and don’t need retail space.
6. Reduce your risk profile
When disasters strike, people look to their insurance policies for assistance. If your business doesn’t have the right type of coverage however, your losses may become much bigger than you anticipated. Whilst insurance can’t cover every eventuality, a knowledgeable adviser can assist with ensuring you have a policy that is right for your business.
To have your insurance policies reviewed and strengthened for future potential risks, contact Lisa Carter.