As we slowly emerge from the COVID-19 pandemic, the toll the crisis has taken on the business sector is taking shape. While certain sectors have been more adversely affected than others, it’s also clear that businesses who started the year with weaker business models and stretched balance sheets are the ones really bearing the brunt.
What I’m seeing as I work with business owners to guide their digital marketing, is a tendency to put tactics above strategy. It appears more and more businesses have poured their efforts into paid advertising and social media domination instead of first ensuring their product or service is a good fit for the market.
The classic “put the cart before the horse” manoeuvre.
Instead of starting with a solid foundation and building a robust business from the ground up, some business owners are rushing ahead without performing due diligence or taking the time to test their idea. In a buoyant market, you might be able to get away with this. However, in a crisis, there’s nowhere to hide. Even if you’ve somehow come through the current crisis okay, that doesn’t mean your run of good luck will continue.
To truly crisis-proof your business, it’s important to:
- go back to basics so you understand what you’re offering and why people should care
- analyse your situation so you know where you are now and how you can move forward
- know your numbers to monitor performance and gauge the health of your business
- be aware of your business levers so you can be more flexible and responsive in a crisis
- learn to embrace and harness change to future-proof your business and start innovating.
Focusing on these elements will help you crisis-proof your business, recover faster from the current downturn and set your small business up for future success. In today’s fast-changing business landscape, failing to plan really is planning to fail.
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5 Ways To Crisis-Proof Your Business
1 Get back to basics
Understanding the basics, especially your ‘why’, will help you see if your product or service is a good fit for your market and whether your business is viable. Getting back to basics provides clarity, keeps you focused and sets you on a clear path to growth.
What’s your ‘why’?
- Who are you? (brand identity)
- What are you doing? (products & services)
- Why are you doing it? (mission)
- Who are you doing it for? (target market)
- Who else is doing it? (competitors)
- Why should people choose you? (unique selling proposition)
- What value do you provide? (benefits)
Without a clear value proposition (what you do and how it helps your customers), you can’t solve your customers’ problems and your offering won’t resonate with them. Get clear on the value you deliver to your customers and build your business around that (these steps will help!).
A business plan ties together your ‘why’ and your value proposition with your financials, your goals and your marketing and communication strategies. Your business plan identifies your business goals and outlines your strategy to achieve them. It’s like your business bible.
2 Analyse your situation
Analysing where your business is now, provides you with a baseline to measure against in the future. This identifies gaps in your strategy, the strengths and weaknesses of your business and helps set realistic goals, putting you on the path to success. Here are a few tools that can help.
The traditional SWOT analysis, identifying strengths, weaknesses, opportunities and threats, is an oldie but a goodie. Easy to use, it’s a highly effective tool to analyse your situation and identify current and emerging issues, helping you become proactive rather than just reactive.
Similar to a SWOT, a situation analysis reviews the internal and external factors affecting your business. This gives you insight into how your customers, your products, your positioning, your distribution, your competitors and your environment affects your business operations.
5Cs of marketing
You can also analyse your business against the 5Cs of marketing – company, collaborators, customers, competitors and climate:
- Company – evaluate your products, goals, competitive advantage and brand statement to check you are still on track for success (this should tie into your business plan).
- Collaborators – identify partners & investors, suppliers & distributors and service providers and review for relevancy (are you still getting the most from them?)
- Customers – review your target audience, motivations & behaviour, communication channels and brand perceptions (undertake a customer survey to find out).
- Competitors – analyse your competitors, their strengths & weaknesses and their strategies & tactics to identify capability gaps (improve your competitiveness).
- Climate – research relevant laws and regulations, social trends, economic trends and technologies to identify opportunities and threats (boost your position in the market).
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3 Know your numbers
To crisis-proof your small business, you need to become comfortable with your numbers. Now, you don’t need a degree in economics but you do need to have a basic knowledge of finance so you know whether you’re operating at a profit or loss and what you can do to turn things around.
Financial literacy is understanding financial concepts and what they mean for your business such as income, expenses, profit, loss, debts, assets, cash flow and your balance sheet. Without this understanding, you won’t know how to monitor issues or boost your bottom line and your business won’t be successful – it’s that simple.
You don’t have to engage a bookkeeper or accountant to build your financial literacy. Another way to build financial understanding is by using a financial management program such as Xero or Saasu. In addition to streamlining your tasks like invoicing and reporting, these programs build financial literacy and will give you the tools you need to monitor the health of your business.
4 Understand your levers
This brings us to your levers – the elements of your business that you can tweak to increase your bottom line and the health of your business. This is why you need to have some understanding of your finances, so you know which lever (or combination of levers) to use to achieve your desired outcome. Your levers control how much cash comes in (volume, frequency, pricing, cash flow) and how much cash flows out (costs, debts).
Boost volume by increasing the number of products or services you offer or widening the territory that you service or supply to, moving from local to interstate/international sales. You can also increase your hours or speed up production to increase sales volume.
Increase the frequency of sales by offering incentives such as discounts, free shipping and ‘try before you buy’ options. You can also bundle up your most profitable products or services to clinch the deal or offer an ‘other people bought this, with that’ suggestion at checkout.
Reduce costs by reviewing all your outgoings. Can you negotiate with your suppliers to reduce costs? Can you find savings in your overheads, reducing utilities or other expenses? Can you consolidate your debts to reduce repayments and streamline your costs?
Raise your prices strategically to boost profit. Has it been a while since you increased prices? How do your prices measure up against what your competitors are charging? Can you increase your prices by increasing the value that you deliver (by bundling up products, etc.?)
Help your cash flow by improving your sales process so you convert sales sooner, on the 3rd touch instead of the 5th or 7th touch. Where possible, try to sell to customers with COD (cash on delivery) terms or offer shorter payment terms (between 7 to 14 days).
Decrease debt by performing credit checks on customers before extending terms and request a 30-day supplier payment date. Consider offering an early settlement discount and look at debtors factoring (when you sell your debtors book to a collection agency for a % in the dollar.)
5 Embrace change
Businesses who are agile, flexible and open to new ideas are the ones that ultimately succeed. This means you need to come to terms with disruption, embrace digital transformation, prioritise innovation and be ready to seize the opportunities that WILL come your way.
Disruption surrounds us – there really is nowhere to hide. The restaurant, retail and professional services industries have been disrupted for some time, resulting in businesses having to transform the value they offer by doing things differently. Be open to new ideas, understand what your customers really want and think outside the box to work with disruption.
The COVID-19 pandemic has thrust digital transformation front and centre for every business owner. Now, more than ever, you need to examine your business to identify how you can adapt to improve operational efficiency and enhance the customer journey. Start by focusing on building a sustainable strategy to help harness the right technology and optimise your digital presence.
The same old solutions aren’t going to cut it anymore. Customers want experiences and expect greater levels of service, convenience and communication. Embrace innovation and think about new ways to deliver what your customers want. This could involve productizing your services, creating memorable purchasing experiences or initiating new relationships with your customers.
Seize the opportunity
Being in a position to seize opportunities is the best way to become ‘crisis-proof’. Deciding to be proactive rather than reactive is a powerful change in mindset that will help you deal with every challenge thrown your way. Approaching everything as an opportunity rather than a threat puts you and your business in the box seat to adapt, innovate and meet the needs of your customers.
In business, nothing ever stays the same. So, instead of focusing on the challenges, why not work on making your business more crisis-proof? Getting back to basics, analysing your current situation, knowing your numbers, understanding the levers in your operation and embracing change will help you be in a position to weather any future challenges that come your way.
Marketing Sense is here to guide you toward marketing success. Give us a call to discuss your needs and make sure you download your FREE copy of our Brand Statement Worksheet to get crystal clear on your business, your offering, your audience and your competition.
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