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Future proofing your small business by keeping these 5 things front of mind

Published On
22 November 2022
Category
Business tips & insights

The past two years have changed the landscape of work irrevocably and demonstrated that now, more than ever, future-proofing your business is crucial.

Following the onset of the global pandemic, an ABS survey (ABS, “Insights into Business Conditions and Sentiments”, 2022) indicated that around 10% of businesses across Australia would close their doors permanently when government financial support ended. Many were not prepared for the rapid transformation to digital-centred work, and the redefinition of ‘normal’ work life left businesses struggling to stay afloat. Innovation and development are happening at a drastic rate, and failure to keep up, plan for the future and understand risk is what might leave your business falling behind. With this in mind, here are five tips for minimising risk and future-proofing your business: 

  1. Get your business in a strong financial position

Where money is involved, profit isn’t always enough, particularly when it comes to anticipating future risks. A strong, free cash flow is key to ensuring that the loss of any critical customers wouldn’t be detrimental to the company. Particularly in the early stages, it can be tempting to inject all cash flow back into the business. Whilst helpful for growth, having a cash-poor business significantly increases risk, should something go wrong – after all, the best time to secure funds is when you don’t need money. In this time of increasing economic certainty, the peace of mind that cash reserves bring is incredibly beneficial, both on an individual and company level. 

  1.  Focus on management development 

Utilising effective management development could make the world of difference in creating an adaptable team that is prepared for change. The Harvard Business Review reported that 60% of a company’s future roles can be taken on by current employees if effective reskilling is adopted. For most businesses, organizational change is inevitable, so having a team that can be seamlessly re-skilled is one of the keys to survival.

  1. Leveraging technology 

The global pandemic has emphasised the multifunctionality of technology, highlighting its capacity for flexibility, and rapid adaptation. Technology is now a universal tool that can be used to optimise plenty of functions from recruitment, to finance, to training and development. Similarly, real-time data analysis allows you to make data-driven decisions for your business, identify patterns and plan for the future. 

Technology also has a role to play in keeping your business safe and secure. A study by CyberSecurity Ventures (Steve Morgan, “Cybercrime to Cost the World $10.5 trillion Annually by 2025”, Cybercrime Magazine, 2020) suggested that cybercrime would cost the world $10.5 trillion (USD) annually by 2025.  With this in mind, IT protection measures such as VPNs, anti-malware software and firewalls are adopted to optimise the security of your company. 

  1. Predicting future demands

One of the most important aspects of risk reduction and future-proofing is understanding the emerging priorities of a new generation of consumers. Anticipation requires imagination, so taking a creative, flexible and adaptive approach to the future market is likely to reap significant benefits for your business.

Beyond reducing future risks, anticipating market demands is shown to improve marketing and increase customer satisfaction; by forecasting future needs, your business can effectively meet them.

  1. Diversifying your business portfolio

As your business grows, you may reach a stage where diversifying your company portfolio becomes a viable option. Serving a single niche carries increased risk, and thus diversifying can be seen as one of the most effective risk-management strategies. Diversifying your business can attract more clients, introduce multiple revenue streams, and create broader brand recognition, all key aspects of future-proofing the company. 

Greater financial security through multiple revenue streams means no single loss is likely to be detrimental to the entire business. However, it’s important to note that no diversification venture is risk-free, so it’s essential to assess the company’s position before making any expansion attempts. 

Whilst no business is ever entirely risk-proof, adopting these five steps will leave you with an agile and adaptable foundation that is significantly better placed to weather the toughest storms. Although implemented with the future in mind, these practices are universally beneficial, creating a culture of employees that are not just prepared, but excited for future change. 

We also addressed the steps to weathering a recession as a small business. Have a read of this now.

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