Seven ways to make your business more robust and resilient
How and where you may be able to mitigate business risks
Businesses of all sizes often get caught out by unexpected events, but for small firms in particular, these can have disastrous consequences. It’s wise to act to ensure you’re better able to withstand them, but what can you do to make your business more robust and resilient such as having a business continuity plan in place?
1. Don’t rely too much on too few customers…
Having most of your sales come from one or two customers may seem like a good thing. Certainly, you have to spend less time and money trying to attract new customers. But, there are risks. What if they suddenly find another supplier who could provide better choice or value? What if they experienced serious cash flow difficulties and couldn’t pay you or ceased buying from you? Where possible – avoid relying too heavily on too few customers.
Action point: Find out how to create a sales strategy for growth >>
2. Eradicate waste from your business…
Wasting money by buying things you don’t need, or paying too much for things you do, places unnecessary pressure on your cash flow. This makes it more likely that you will run into difficulties. To ensure your business remains as efficient and profitable as possible, eliminate waste from all areas of your business. If you don’t need it, don’t buy. If you do need it, get best value deals from reliable suppliers.
Action point: Learn how to minimise your business costs >>
3. Don’t depend too heavily on select suppliers…
Some products or services can be unique or superior, which can attract your business to certain suppliers rather than others. Some suppliers offer the same products, but they’re backed by superior service or credit terms. But if a key supplier runs into problems, it can leave you unable to keep your customers happy. Try to mitigate risk by not relying too heavily on any supplier. At very least, research alternative options, so you know where to turn if you’re let down.
Action point: Get information about finding new suppliers >>
4. Don’t rely too much on one staff member…
The same can be true of employees or even your role in the business. If you or another team member has unique skills, knowledge or customer relationships, what would the impact be on your business if you or they became seriously ill or injured and were unable to work? What if your employee decided to leave? Responsibilities and unique knowledge should be more widely spread or at very least documented, so that others can take over in an emergency.
Action point: Find out how to delegate responsibility >>
5. Have contingency cash funds if possible…
Cash can be a scarce commodity when you run a small business, but if you run out of it and can’t pay your suppliers on demand, your business will fail. If you can, try to ensure you at least have some money saved if you run into cash flow problems. At very least, identify possible sources of emergency finance or funding, just in case you need it.
6. Spread risk by diversifying…
Less isn’t always more. Being overly reliant on sales of one or a few products or services also creates risk, as can selling to a limited type of customer or to businesses in one sector or region. To mitigate risk, consider developing or introducing new products or services. Why not target new types of customer, whether in another sector, UK region or country?
Action point: Find out how to start selling to customers overseas >>
7. Have reliable early-warning systems in place…
If something starts to go wrong, you need to be able to recognise the signs as early as possible, then you can swiftly act to try to limit damage. The data within your financial records can be highly revealing, of course, but only if you monitor key indicators regularly. To flag up serious issues and perhaps enable you to find solutions before they hit you, your business should already be working with cash flow forecasts.
Action point: Get tips on how to deal with cash flow problems >>