Resilience is a crucial trait for successful businesses of any size, but smaller endeavors are at higher risk of being negatively impacted by changing market forces or unforeseen events. How you structure and manage your business will be the primary factor in how it reacts to and recovers from, unexpected incidents.
These tips, which no doubt will sound familiar, will improve your business’s resilience and increase your potential for long-term stability. The real challenge is not in acknowledging their importance, but ensuring they are implemented and adhered to.
Staff members, like customers, are a relatively unpredictable variable. It is perhaps easier said than done but try not to rely on too few staff members. Clearly there are benefits of having a competent and focused core who you know and trust, but if their numbers dwindle through changes in circumstances, you need to ensure you can adapt.
Train members of staff in multiple, overlapping areas of the business so they can cover for each other’s absences, and train new employees if needed. If one member of the team has a niche knowledge set, you may find them hard to replace when they inevitably leave; hence the importance on them learning and understanding multiple jobs within the business. It is unlikely to solve the issue of having to employ a new staff member but is likely to eliminate a lot of stress until the new employee is fully on-boarded.
It is always good practice to eliminate waste – period. When business is booming, it’s easy to slip into or overlook profligate actions. However, any wasteful habits will undoubtedly carry over into less profitable times. It can be challenging for staff members to break out of their pre-established routines so maintain a level of efficiency at all times. If your business becomes wasteful, the transition to frugality may be too hard for you and your staff to adjust to when it’s necessitated by changing market forces.
To react quickly to an unexpected event, you must be able to refer to an agreed upon plan of action. Having a contingency plan for unforeseen circumstances eliminates a lot of the mistakes that arise from panicked decision making. Think about the role of each member of staff and how you would like them to react to a range of different scenarios before ensuring each knows their role.
Having an emergency ‘cash’ supply is a critical part of contingency planning, so save as much as you can at all times (within the confines of your business strategy). Create a specific fund and add to it as often as possible so you can pay your creditors and fulfil your obligations if revenue streams dry up. Having a significant cash supply is often the sole saviour of small business when faced with hardship or financial adversity and most successful business can credit their success to falling back on emergency funds early on in their operational history.
Having early knowledge of an impending crisis can give you the power to react to it more 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 business can be conveyed quickly to the people in positions of greater authority.
If your staff seem concerned, take their opinions seriously. The people who work in the business every day are usually the first to identify potential problems but, unfortunately, they’re also often the last to be heard. Once you’ve detected an issue early, you have the benefit of being able to be proactive rather than reactive.
Last, but not least, your customer or client base is a critical aspect of your business as it generates the revenue. To safeguard your income, you need to diversify your customer base and multiply the source of your revenue streams. Relying too heavily on a small number of clients will expose your business to unnecessary risk.
Businesses that focus their attention on the needs of a narrow range of paying customers may sometimes struggle to cope when client numbers drop. Invest your time and money into attracting a healthy pool of clients to minimize the impact of fluctuating figures.
This article finishes as it started, noting that the familiarity of these ‘tips’ causes business owners to often ignore them. All businesses face inherent risk but knowing how to react when disaster strikes can be the difference between failure and success. A company that plans for unforeseen circumstances has a higher chance of weathering the storm and coming through the other side as a more resilient, healthy and profitable enterprise.