Business strategies for these uncertain times
Since the arrival of Covid-19 business owners have been facing uncertain times, and that calls for practical strategies, says Richard O’Brien.
COVID-19 has brought swings in global and local economies, changing business models and complex geo-political influences. Understandably business owners are increasingly facing uncertain times, and that calls for practical strategies, says Richard O’Brien.
“In this environment, businesses need to resist the impulse to just buckle-down, cut costs and “hope to ride-it-out”. Instead, they need to adopt actions that will help position their business for tomorrow and their future success,” says Richard O’Brien, director of the New Zealand business for sale website www.nzbizbuysell.co.nz
“It is human nature to go to ground under uncertain or threatening conditions. Unfortunately this often leads to an unhelpful defense strategy of cost cutting, little investment, releasing staff, reducing marketing and withdrawing from pushing into new markets.
“By having the right mindset and adapting your plan and business, you can develop some practical strategies that will help you successfully navigate your way to a successful tomorrow,” says O’Brien.
Here are his recommendations.
1. Embrace change – we all know change is inevitable. So best embrace it and harness it to help get ahead of the competition. Firstly your business must survive, so work with your bank and review your big cost items, noting it will be important to stay in the market and maintain your relationships, brand and profile.
Your attitude and thinking is important here, don’t just head for the back of the cave – adapt and position your business to take full advantage of the new environment.
2. Be informed – Sense the context of your new business environment and stay informed so you understand any emerging trends, threats and opportunities in your industry. Do research to increase your knowledge and reduce your risk.
3. Be adaptive and dynamic – ensure your business can quickly shift focus and resources to meet the changing circumstances. An adaptive and dynamic business model will help you be more resilient to sudden changes. It will enable you to make the most of your resources and help you innovate and more quickly recover from setbacks. This way you can position your business to benefit from the new opportunities that arise.
4. Innovate – while your profits might initially take a hit, look for the opportunities. Adaptive businesses will look at the bigger picture and work on the long term value of their clients. Maybe there is an opportunity to redesign the business model, or perhaps a market or service/product innovation is required. Look for a new way forward – this could be by looking at the problem in a different way to gain greater clarity and insights.
5. Support and communicate with your customers and team – Think long term. There may be value in simply surviving the crisis to emerge and find you have less competition. Keep engaged with your customers.
All too often, in uncertain times, the head count is cut and hiring is put on hold. A great deal of knowledge, skill and capacity can be lost and this can be difficult to replace. Consider your future plans and needs carefully. Communicate empathetically with your employees who will be feeling uncertain about their jobs. Ensure they feel supported and valued and are clear on your business vision and any new goals.
6. Risk management – in uncertain environments we feel uncomfortable, cautious and unsure because it is difficult to predict what is coming. But at some stage you have to make a decision to move forward. By making small and reversible decisions, you can better manage your risk and can back out if it is not working.
Unfortunately, in difficult times, there are some businesses that will fail. Some jobs will be lost and market patterns will change. However, this time will pass, and when it has, there will be increasingly more people looking to buy products, services and businesses.
Companies will be trying to rehire staff. Some businesses will be overly busy now they lack the competition they once had – and potentially there will be a new environment to tap into.
Like it or not, change is inevitable – some will embrace it and harness the changes to get ahead of the competition. A great example of this was during the 2007 GFC (Global Financial Crisis), when a small New Zealand technology development business took a major financial hit. This business struggled along, rethought their strategy and repositioned themselves. They held onto their staff of specialist engineers and worked on improving their systems and processes. When the crisis was over they were inundated with work because their clients and competitors had shed staff, killed any investment, and had nothing to offer. Their hunch was right. To quote the director, “we ended up doing very well out of the GFC”.