Planning ahead in a time of uncertainty

Published on May 9, 2024 | Webster Bank

When you’re running a business, it can be tough dealing with unforeseen circumstances and a fast-changing business landscape.

We have five tactics to help you plan ahead in an ever-changing environment.

1. Identify your drivers and how you’ll measure them

While sales revenue is often the best indicator of how well your business is performing, other drivers can paint a clearer picture. Here are some other important things to look out for and suggestions for how to measure them:

• client acquisition and retention (call volume, demos booked, foot traffic, website leads)
• brand awareness and user engagement (social media impressions and interactions, website traffic)
• employee satisfaction (employee turnover trends, employee engagement, leave request volume)
• gross profit (cost increase or lower margin sales)

Choose which business drivers you want to monitor, set thresholds to measure them and then actively manage them to avoid slippage and yield positive outcomes.

2. Create a cash buffer

If sales fall while expenses increase, your profitability could be in danger. Having a cash reserve buys you more time to fix what needs fixing. The best source of capital is what you can save internally. Most businesses can squeeze extra cash by tightening their tactics, becoming more efficient, or altering how they do business, including:

• reducing the level of raw materials or inventory (try using ‘just in time’ principles)
• clearing old or surplus stock without reordering
• selling unused or infrequently used assets and lease back if needed
• renegotiating lower prices with suppliers without compromising quality
• discounting outstanding customer invoices
• asking suppliers to delay payments or pay in installments
• requesting deposits or progress payments in advance
• deploying fraud prevention tactics and tools to reduce losses

Depending on your circumstances, other cash saving measures might be needed. It may be time to scale back and remove the low profit-making parts of your business, or you could consider closing certain locations, branches, offices or product lines to reduce expenses.

3. Expand and diversify your customer base

You’ll most likely be faced with the task of having to look for new customers due to factors outside of your control, such as emerging competitors, slow demand, new business models, or new customer needs.

There could be potential new customers hidden in your existing market. Profile your ideal customer and try to:

• target them with similar needs to your existing profile
• add capabilities that solve their pain points
• optimize your website with keywords for search engines

One way to be more effective in finding new customers is tracking what marketing tactics worked. Don’t forget to ask for referrals – your customers are likely to know other people or businesses that are similar and are often willing to recommend your business.

Another way to find new customers is to widen your business model by:

• expanding into different geographical locations, or franchising
• selling online
• collaborating with other businesses
• buying competitors or complementary businesses looking to sell
• selling through third-party marketplaces

Applying these tactics may be worthwhile to convert potential clients into new customers.

4. Protecting what you have

Given that existing customers tend to be more profitable and easier to cross-sell than focusing on acquiring new customers, it’s important to safeguard your current client base from possible competitor action.

A few ways to grow and maintain your existing customer base can be:

• sourcing unique products or services
• contracting an exclusive trading area
• asking suppliers to exclusively sell to your business
• requesting to be an exclusive vendor
• setting up formal referral agreements within your industry

If there are areas of your business that are critical to your success, consider legally protecting and taking action if anyone breaches your rights. Your IP includes copyright, patents, designs, trademarks, trade secrets and plant variety rights.

5. On-going innovation

For growing businesses, the key to innovation comes down to listening to customers and looking for new ideas and ways to do business.

To discover new ideas, tap into what similar businesses are doing right around the world. Read up on trends, look at research papers and see what’s affecting your line of work. Social media channels are also a useful source of information, so it’s worth following relevant industry feeds.

Finally, reach out to your customers and ask them what else they need, as well as their issues and problems you can help solve. They’ll also be the ones that have the most invested interest in your new ideas.

Note: The opinions and views in this article are for informational purposes only and are not intended to provide specific advice or recommendations. Please consult professional advisors with regard to your individual situation