How to prepare a business for the future
Once you have got your business established and running well, it is easy to sit back and let things ‘carry on as normal’.
However, this is exactly the time to ask the question: is my business fit for the future? Where do I want my business to be next year, the following year – and in five years’ time?
In this article, we help you step back from the day-to-day pressures of running a business, take stock and put in place measures to make the most of new market opportunities, to prepare a business for the future.
When was the last time you conducted customer research and analysis? Making sure the services and goods you supply meet your customers’ needs is vital to continuing your business. Which ones are really working and what are you doing that is no longer needed? You should never be afraid to directly ask your customers for feedback on your performance. But you must do it in a way that promotes honesty.
A simple benchmark against the competition can also provide an idea where you are winning and losing. It can be time consuming and even costly to do this,
but it is vital to do as it can give you a real edge and prepare a business for the future.
A SWOT analysis can work really well when looking at competitors. You need to look at their Strengths, Weaknesses, Opportunities and Threats, and compare them to yours. Some easy wins here are to look at what your competitors do on social media. Also take a look at their website and get hold of their sales material. Finally, take a look at their company accounts using Companies House (if you’re not sure what you’re looking for, you can ask your accountant to help translate).
There is no way of getting away from words like ‘profit’ and ‘margin’. On top of pricing, marketing, sales and after-sales service, there’s design, packaging and systems that all need to be regularly looked at too. Experts suggest that looking for some ‘quick wins’ here can help the process.
Costs are often an area that businesses find hard to manage. Too many wait for a rise before reacting, instead of always looking for new sources of materials that could reduce costs. Negotiation is often not a strength of many businesses, but being able to negotiate with suppliers on a regular basis can help to keep costs under control.
You’ll also know when possible rises in cost will be happening.
We all have a propensity to work in a short-term, reactive way. Taking time to stand back and look at the business as a whole is vital ‘for the future’. For instance, how you set up the business at the start may be the very thing that now holds it back.
You will need to look at all the ‘internal factors’. Here we are talking about the offices, facilities, IT, people and skills, and the management.
Let’s take them one at a time.
Office size matters
When it comes to premises, the recent rise of working from home shows that not everyone has to be in the same building to ensure success. Flexibility is the key here. As an employer, if you want to get the best staff you are going to have to adapt and offer this to your people. But remote working doesn’t come without its challenges. Creating a truly inclusive workforce will mean you have to work harder.
You may then want to look at your commitment to any long-term leases. If you can downsize your premises, it’s a great opportunity to cut some big fixed costs. You may also want to look at whether you need to be located where you are. And, by embracing remote working, you get the flexibility to expand and contract more easily.
Making technology work for you
Technology is one of the biggest headaches for businesses. Changes are often introduced piecemeal, as the business expands. What you really need to know is if the business keeps growing can the IT cope?
The biggest names in bookkeeping technology are Sage, Quickbooks and Xero. Technology integration is at the heart of what they do.
Sage, a market leader in cloud business management solutions, and Tide, the UK’s leading business financial platform, has a partnership offering a tightly integrated banking and accounting product for Tide members. This is the way the world of technology is going.
If you’re app-orientated, Xero’s recent Job Ahead Report found that SMEs in Australia, New Zealand and the UK that used five or more apps grew their sales by 4.3% in the year to December 2020, while those without apps saw a decline of 3.4%.
You won’t be surprised to hear that the Xero ecosystem now has more than 1,000 certified apps connected to its software.
If you need advice here then use your professional advisers. Ask your accountant what they think works best in their experience and has been successful when working to prepare a business for the future. They will have instant feedback from lots of SMEs who might be at the same stage in the business cycle as you.
You should also be using technology for finding new clients and new routes to market. Are you on Facebook, LinkedIn, Twitter or Instagram? Having a great website is all well and good, but you need to funnel people to it. There’s nothing wrong with printing off some flyers and having them delivered, but you can do the same online and target your audience more precisely. It is hard to keep up with customer expectations, but this is a key to future success. Remember, if you don’t do it a rival will.
Having a trained workforce is key for the future. Do you have the right people in the right jobs with the right skills?
The UK government has introduced a range of skills and employment programmes for employers, including apprenticeships, industrial placements (T Levels), the Kickstart Scheme, the National Careers Service, the sector-based work academy programme (SWAP), traineeships, free Level 3 qualifications for eligible adults, and the Skills Bootcamps. Find out more about these schemes on the gov.uk site.
Let’s look at just two of these services.
The National Careers Service will help you carry out a skills analysis for your business to understand gaps and find solutions.
It will also help you find skilled people to fill current vacancies you might have. The government believes this will help “future-proof your business for the future labour market”. Perhaps, more importantly, it will also help increase your resilience and productivity.
As part of the Prime Minister’s Lifetime Skills Guarantee any adult aged 19 and over who is looking to achieve their first Level 3 qualification now has the opportunity to access a fully funded course. In keeping with the government’s commitment to put employers at the heart of the further education system the offer is focused on sector subject areas that are linked to labour market needs. Don’t forget the 2019 LinkedIn Workplace Learning Report found that 94% of employees would stay at their company longer if it invested more in their careers.
Financial management is crucial
Many businesses fail because they don’t have proper financial management in place. Cash flow needs to be monitored and regularly reviewed. Too many successful businesses fall down on this.
You should also regularly review your working capital. Do you have the same overdraft facilities at the bank that you had when the business started? Again, you need to compare what you have with the industry norm.
Having access to a proper line of credit or loans can also help to keep costs down. You need to have an eye on the most appropriate and cheapest form of finance.
Costs need to be equally managed and put under constant review. It might sound obvious but your sale price must be higher than all your costs. As one expert said: “You can’t expect your customers to pay the price for your business inefficiencies.”
Another way of ensuring you have done everything you can to prepare a business for the future is to diversify what you offer. It’s that old adage about not having all your eggs in one basket.
If done well, diversification will not only boost your profitability but also boost your brand. It can also be a defensive move and help protect you against companies that directly compete with you. It’s been suggested that if you’re in a slow-growing market then diversification allows your business
to make effective use of any surplus cash flows. It’s been suggested that if you’re in a slow-growing market then diversification allows your business to make effective use of any surplus cash flows.
There are always risks in such moves. You need to make sure the cost of entry into a new market will not hit future profits, and the idea has to pass the ‘better-off test’. There must be a benefit for the company to diversify.
Plan for the future
Now you know where the business is, you should have a better idea about its future needs. Creating a plan with a timetable will help you commit to your course of action. But remember, the best laid plans don’t always run smoothly. You need to be flexible and be ready to adjust to any bumps in the road. We live in an ever-changing world and what you thought would work in 2021 might not work in 2023!
Finally, if your plans quickly break down don’t be afraid to ask for expert input.
Signing up a skilled consultant can help provide a truly impartial assessment of what needs to happen.
Assessing your business and creating a growth strategy is key to prepare a business for the future. If you need help doing this, then it may be time to call in the business rescue experts. Professionals with the experience, know-how and acumen to help you help your clients consolidate and re-focus, to fully take advantage of the opportunities that lie ahead.