As a small business owner, it can be challenging juggling different parts of your business. From managing your staff, paying your suppliers and retaining your customers. So, when the unpredictable happens, it can feel like a stretch you don’t have to give.
This year you’ve already faced changes in tax levels, energy costs, import delays to name some. So, we want to help you plan for the future, so that you can keep your business in the best shape possible to reach its 2022 goals.
Here are four business areas for you to consider in your business plans moving forward.
1. Diversify your supplier base
With global conflicts, heavy import taxes and consequential import delays, diversifying your suppliers and moving away from a single stream of supply can reduce significant risk from your business operations.
Sourcing your materials or goods from multiple suppliers means that you can spread your demand. Reducing your level of dependence on that single supplier and enhancing your businesses flexibility in situations that could jeopardise their ability to fulfil your orders.
McKinsey’s research found that 93% of supply chain executives intended to make their supply chains far more flexible, agile and resilient.
This is especially important if your suppliers are overseas. With many delays reported in the export and import market, having alternative suppliers to turn to can reduce bottlenecks that could impact your business. Meaning you’ll be able to keep your business running smoothly.
Even if your suppliers are within your home country, they themselves may import certain materials, which in turn can impact you. Understanding the background of your supply chain and the potential for shortfalls can help you bulletproof your business against impact.
You may also find diversifying improves your bargaining power. Encouraging your existing suppliers to improve their cost or service to you.
2. Working from home capabilities
If the last two years have taught us something, it’s the importance of being able to work outside of the office. In-fact, research found that 60% of the UK's adult population worked from home during the first lockdown and 25% plan to continue working from home permanently or occasionally.
With working from home becoming the new normal and more employees requesting flexibility for their work arrangements, get your business ready. Being able to provide the option or adapt when an employee is unwell, isolating or looking after others, can be key in keeping your business running smoothly in these turbulent times.
This will not only offer potential benefits to your business i.e. more attractive employment terms for some, but also reduce the burden of managing staff cover.
Research found that “with working from home being the only option for most employees and businesses over the last 15 months, attitudes have definitely changed” and 51% of employees say they have seen their productivity and the quality of their work increase as a result of more flexible structures.
You may find offering these flexible policies allows you to scale up and down your staff numbers easier too. For example, outsourcing or hiring more temporary workers who can do remote work.
Having these capabilities means that your business and staff are more prepared and comfortable to adapt in any given situation.
3. Focus on looking ahead
Looking ahead is key in keeping your business in the best shape possible. Good business planning means you’ll best understand where you currently are as a business, where you want to be and what you need to do to get there. Whilst, helping you identify obstacles in the environment that may impact your business plans.
Being in “reactive mode” is when you respond to challenges or opportunities when they impact you. When you focus on moving away from “reactive mode” to “proactive mode”, you may find yourself better prepared and equipped to deal with the unexpected, when they do arise. Rather than feeling under pressure or panicked.
By keeping an eye on current trends, industry disruptions or environmental changes ahead of your business, you’ll likely reduce your vulnerability to external threats. Whilst, helping you build out a more resilient and adaptable business model.
For example, spotting rising industry costs can help you negotiate prices early or reduce costs elsewhere to combat risks to your profitability and keep your balance sheets healthy.
Insider media Limited states “in a rapidly changing world, forecasting helps prevent organisations from becoming victims of circumstance”.
Looking ahead is not only great for reducing risk, but it also helps you to take advantage of new opportunities, which you could otherwise miss. Such as potential mergers, new products or revenue streams. You may also spot the need to hire more staff ahead of time.
If you’re looking for a tool to help you, check out the Capitalise for Business platform. This FREE platform spots risks and opportunities ahead of time for you and offers you finance insights, all in one place.
4. Keeping credit score healthy
In our Get fit for business research report, we found that small business leaders see the value of keeping tabs on their credit score, yet many are still hesitant. And 31% of leaders said they’d like to learn how to improve theirs in 2022.
Keeping your credit score healthy is such a critical factor in creating a financially stable business. But it requires a bit of TLC. It’s important to check your rating as regularly as possible.
Your credit score is a measure of creditworthiness, meaning financial lenders will often be judging you and your business based on this rating. Your score is between 0 to 100 with good credit being at the higher end - 81-90 highlighting low risk.
Some examples of how you can keep your score healthy are:
Maintaining good payment histories
Nurturing your supplier relationships
Filing full versions of your statutory accounts on time
Keeping your credit in check means that not only can you spot risks ahead of time and plan, but you’ll also be able to put those plans into action. For example, if you spot the need for funding, having a good rating can put your business in a good position to access finance with lenders whenever you need it.
You’ll also be better placed to negotiate terms with those lenders or your suppliers. Something which is incredibly powerful with the changing industry at the moment, and the movement of “just in time” supply chains to “just in case”.
Keep your business fighting fit
That’s our four tips to get you thinking about how to put your businesses best foot forward for the future. Implementing these tips and a proactive approach can really help you build out a resilient and successful business. Whatever the industry throws at it.
Sign up for our latest webinar which talks you through what you can do to make sure business is best prepared for the unpredictable. Including how you can spot risks in your book of business early and what to do if your customers go bust.