The future comes fast for most people who start a new business; most fail within the first 3 years. They follow an idea, throw money at it and then limp away from the wreckage.
For others, it is the unexpected that is the spanner in their business dream. Everything is going along well and then, just when you least expect it, along comes a new technology, trend or even a pandemic.
To survive and thrive in business, you could do worse than adopt the simple but brilliant Boy Scout’s mantra: Be Prepared.
So, how well-prepared are you? Who knows what competitive pressures or external shocks the future will present. Whether you are just starting out or have already survived the pandemic, how resilient are you for the future? Put your plan in place now. Here are 5 ways to future proof your business.
1. Don’t keep all your eggs in one basket
Diversification is a strength. Never let your business be in a position where it is dependent on one customer or one product. What happens if that customer ends the contract? What happens if they go out of business? You’ll go down with them too. What happens if a competitor brings out a better, more attractive product and sweeps up all your customers? You will be left high and dry with a lot of expensive stock, no way of paying your bills or debts and inadequate capital to turn things around.
A range of customers and products means that if one goes down, you can quickly shift focus. You can keep a strong cashflow giving you the flexibility to build new areas of strength to close the gap.
2. Keep doing market research
Remember Skype? It once dominated the video conferencing industry to the extent that it was a verb: to Skype. That’s a huge achievement for any brand. But the company was complacent and did not keep up with customer needs or competitive threats. Their leadership and the verb for video conferencing has been replaced by Zoom, an upstart they did not see coming.
Your business operates in an environment of constant change. Sometimes that will operate in your favour as new opportunities present themselves, other times you’ll be left behind. The key is not to leave it to chance. Always keep abreast of trends within your industry, keep listening to customers and keep an eye on your competitors.
3. Keep up to date with Technology
New technology is constantly transforming industries. Tasks like event management, restaurant bookings and taxi hire have become increasingly automated. Slow movers in those industries have lost out.
Every business can benefit from better use of tech, whether that’s opening up online, as many small traders have done during the pandemic, or incorporating small technical adjustments within your business. For example online banking and accountancy, CRM systems, stock management etc.
Depending on your industry, it is also important to keep abreast of the more disruptive technological developments, including machine learning as a service and AI. What about the revolution in online payments? What are the implications for your industry?
4. Have an emergency fund
In every area of business, there are peaks and troughs. That is even more likely in the early days as you build up a diversified customer and product base.
At some stage, even your best-laid plans may come adrift. That is when you need a wonderful relationship with lenders or a buffer fund. Put aside a portion of profits until you have an emergency reserve of at least 3 months cash flow. Knowing that you have this ‘break glass’ money set aside will also put you in a better position to grasp unexpected opportunities as they come along.
5. Invest in your people
The best way to future proof your business is to design yourself out of it. A business that is dependent on one person’s labour or leadership will be as healthy as that person is. That’s a lot of pressure. Instead, start as soon as you can to write down your procedures and delegate and outsource as much as you can. Look to work on, not in the business. Look to see yourself as a consultant and adviser rather than a cog in the company wheel. And think soon about succession. Who can you count on to take the lead when you’re not around? What are you doing to build capacity within your team?
It is easy to start a business these days. But it is much less easy to survive and thrive. Improve your odds by putting in place a future-proof plan from the start.