Times are tough and they are likely to remain challenging for many businesses. So what do businesses have to do to ensure that they succeed in the economic environment of the next few years?
There is no ‘one size fits all’ answer to this business planning question. Different businesses will have different requirements but here are a few tips observed in businesses that have succeeded in past tough times:
Put your customer first
For the next few years, arguably more than ever, companies need to understand their customers, be able to respond to their needs and the pressures they are facing.
Household income has been squeezed, which some experts predict will continue to be the case until 2013. For most consumer-facing businesses, that means offering increased value to the customer. The key here is to invest time in understanding your customer spending patterns and their needs.
Take some time out to research these needs; look at how you satisfy these currently and what you could do to improve your offering. Think of ways you can change the delivery of your product or service.
Simple things like discussing your offering with the customer before providing it, letting them know how things are progressing, calling them up to make sure everything went OK after delivery.
Constant communication with your customers before, during and after the sale is a key factor for successful business in tough times. Ask yourself what you could do to improve this in your business.
Also take time to seek out new revenue streams. Consider rebranding some of your offerings and selling abroad or on the internet. What new income streams are available to you and how can you take advantage of them?
Control your costs
Keeping the cash coming is fundamental but so is controlling the rate at which the cash flows out.
Take some time to think about your costs and what you could do to improve the way you manage your business. Regular review of actual costs against budgets, on a monthly basis, is paramount to financial control of your business.
Look at the way you do things - are there alternatives? Consider alternative suppliers, alternative payment schedules, or just cutting or stopping some activities.
Sit down with your accountant and discuss your strategy for controlling costs. Brainstorm how you can do things more quickly and more efficiently and formulate a strategy for the next year.
Manage your employees
One of the biggest costs for most businesses is the cost of employing people. Many business owners are reviewing the value they get from their employees and are taking time to discuss how they can be more customer focused and efficient in their roles.
Look at alternatives to salary rises, the use of performance related pay and a bonus structure that rewards both good service to customers and increases in sales. Get all employees involved in how the business can improve and do this regularly.
A blueprint for success
There is no single answer but there are some general principles. Be flexible, but also be alert to the dangers. The successful businesses of the future will be fast on their feet but also aware of the risks. They will be lean and efficient. They will be the ones who spot and take advantage of the opportunities that are there. Tough as the outlook appears for the coming years, there will still be plenty of opportunities! Make sure your business is in a position to take them.
Chartered Accountant and Business Advisor