The economic winds in Australia are shifting in the same way
as in other nations worldwide.
The sun still shines on many small businesses, but inflation
is rising, and interest rates have climbed to 4.35%, the highest cash rate in over a decade.
Further, the uncertain disruptions in the supply chain cast
a long shadow. In this turbulent climate, business resilience is no longer a
luxury; it's an imperative.
Financial resilience means having actionable strategies like
enough cash reserves and diversified revenue streams.
When small businesses are resilient, they can continue smooth
operations even during difficult economic periods.
Understanding Financial Resilience
Financial resilience is a mechanism businesses adapt to cope
with or recover from financial difficulties. The mechanism emphasizes having
enough cash buffers, proper insurance, diversified revenue channels, and
adaptive operations capacities.
Small business resilience is crucial because it enables them
to continue serving customers and retaining talent despite market downturns,
supply chain disruptions, or natural disasters.
Additionally, business resilience separates the small
businesses that fail at the first signs of hardship from those that can adapt.
With resilient strategies on standby, the latter adjust their products,
services, functions, and operations according to emerging challenges.
Therefore, building resilience is the key for your small
business if you're seeking sustainable growth and want to thrive in every
situation. However, not opting for resilience means you aim to keep your
business alive from one payroll to the next.
Small Businesses Can Build Financial Resiliency
Building a resilient small business is arduous and
expensive. This notion isn't correct anymore. Resilience is not a that only
some can achieve. If you're dedicated to improving your business, you can build
resilience strategies by following the steps below.
Managing Cash Flow
Efficient cash flow management is critical for not only
survival but also to upscale the business. By closely scrutinizing your
accounts receivable and payable, you can ensure sufficient cash reserves.
Adequate buffer cash helps with handling operative expenses, taxes, payroll and
more.
Additionally, managing cash flow isn't difficult anymore
with the presence of small business finance software. You can utilize tools
like C-FINANCE to track invoices and payments. The tools also send automated
reminders for outstanding dues so you can gain visibility into your cash
position.
The software can also aid in preventing late payments to
vendors while better forecasting. This allows your small business to find cost
savings through more streamlined operations.
Additionally, when you have access to real-time cash flow
tracking and projections, you can make data-driven decisions regarding growth
planning, staffing levels, investment, and more. Better decisions mean
improving profitability, strategic investment planning, and managing
disruptions through adequate liquidity.
Diversifying Income Streams
You may have heard of never keeping all the eggs in the same
basket. Exploring new income opportunities is vital for your small business,
especially when facing economic adversity. While new revenue streams may not
fully replace lost incomes, diversification can help you become antifragile and
deal with sudden market changes.
Take Woohah Productions as an example. This audio-visual
tech provider became famous for pivoting their warehouse into a streaming and
visual events studio. Their smart move allowed them to stay operational despite
COVID-19 lockdowns decimating their core events services.
Additionally, Arosh Fernando, Creative Director of Woohah
Productions, built an online ticketing platform. Through this, he helped the
event agencies and organisers make money on the live-stream and virtual events.
Plus, doing so was all for good as they earned up to 20-30% of their monthly
revenue through this gig.
Therefore, instead of thinking about a new stream when
uncertainty hits you, prepare it in advance. Use monetizing data insights,
explore overseas markets or flip products into services, and be creative about
generating multiple income channels. Remember, tough times call for openness to
opportunity.
Strategic Investments During Slow Periods
When the business is slow, you should see opportunities for
strategic growth investments instead of shutting down things. There are a
number of things you can do to build business resilience like -
- Upgrade the technology
- Streamline process
- Renovate premises on the cheap
- Upskill employee
- Create new marketing strategies
Doing things differently during a slowdown will help your
business bounce back when demand arises.
It's crucial to note that during the pandemic, many
retailers had to switch to e-commerce models. This decision helped them build
robust web stores and fulfilment capabilities that became invaluable revenue
streams.
Many businesses also repositioned their products to align
with emerging consumer interests like health and wellness. Rebranding as
"natural" or "organic" helped cater to changing
preferences.
Building Consistent Revenue Streams
A key pillar to achieving business resilience is cultivating
consistent and predictable revenue through diverse customer segments. Your
business shouldn't rely on a few high-paying clients or ad-hoc projects.
Instead, focus on developing recurring income via
subscriptions, service packages, and consumable products. Furthermore, when you
build a portfolio of retained buyers, it enables better cash flow forecasting
to cover overhead costs.
However, you must note that for consistent revenue, you need
a staff that's skilled and dedicated to their work and the company. You can
ensure that by providing periodic and industry-level training to them.
Additionally, choosing suppliers mindfully for high-quality products/services
is of utmost importance.
Ultimately, it's the quality of your company's customer
service that decides the position of your small business in the market.
Embracing Technology
To achieve small business resilience, you must tightly
integrate investments in people, processes, and technology. Skilled staff
delivers superior customer experiences, clear protocols, and automated systems
that allow for maximum productivity.
Technology tools like small business finance software,
digital payments, inventory optimisation tools, and data analytics can drive
major efficiency. Additionally, cloud computing provides affordable and easily
accessible infrastructure like CRM and analytics tools to monitor sales,
marketing efforts, and other operations.
You can even deploy robotic process automation to perform
repetitive back-office tasks that are error-free and faster, such as data
entry, invoicing, reporting, and payroll processing. This way, your staff can
stress about the tasks that require more attention.
Therefore, by continually optimising human talent with
scalable technologies, your small business can elevate employee and customer
experiences for resilient growth.
Achieving Financial Resilience Is Possible
If you're a small business owner willing to achieve
financial resilience this year, you need to focus on these crucial strategies.
Monitor the cash flow, diversify income, make strategic investments during a
slow market, and introduce technologies to maximise productivity.
Adapting to economic shifts can be challenging for your
business. However, if you perform regular checks on the financial health of
your business and adapt accordingly, nothing can stop you from achieving
sustainable growth.
Author Bio:
Troy M
Troy (Mitch) is a founder of ContinuSys, which is an Integrated Business Management system (IBMS)
that helps organisations become resilient against short and long-term
disruptions.
The IBMS ecosystem specifically helps businesses in
developing and implementing robust business continuity plans to ensure
uninterrupted business operations. Connect with Mitch on LinkedIn.
