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10 Ways to Help Make Your Business More Robust
Posted by James Gulliver
A robust business is one defined as being able to continue to be successful irrespective of the market conditions or ever-changing situations it may experience. A robust business is heavy on planning and process. Therefore, it is prepared for all eventualities and can react to changes in condition quickly and with minimal fuss.
Events of the last few years have been an extreme example of change, and though no one can really say they predicted these events or were fully prepared for the changes brought about by the pandemic, those businesses that had planned for business interruption and disasters were in a much better position than those that hadn’t.
We have the privilege of working with many exceptional companies and through doing so we see common activities being undertaken time and again in businesses that would be considered “Robust” by anyone’s standards.
Here are 10 things you may want to consider doing to improve the robustness of your business:
1) Conduct a Regular SWOT Analysis of Your Business
Regular SWOT analysis is vital to help you understand and clarify your business's position.
By listing out all your Strengths (internal), Weaknesses (internal), Opportunities (external), and Threats (external), you will quickly be able to identify areas for improvement.
p>The outcome of a SWOT analysis conducted by the company management team will be a list of actionable improvements to either further capitalise on areas of excellence or to reduce weaknesses and mitigate threats. This regular exercise, coupled with a review of actions will ensure you are working on improving your business at every turn, and not just working in your business.
2) Benchmark Against Your Competitors
It's a really good idea to make sure you know what is going on in the market. You can confirm your own experience of changing client requirements by watching how the products, services and output of your competitors evolve.
Pricing is one key area to focus on, but you should also take notice of the benefits and features they are headlining in their marketing, as this tells you what they believe is a key decision point for your mutual customers.
3) Ensure Marketing Is Strategic & Effective
Leads are the lifeblood of a business. A business needs a steady flow of leads for growth and to offset any natural attrition of its current client base.
Many businesses make the mistake of only considering leads as a single transaction; therefore, they try to seek a decent ROI at the first interaction. There are products and services where this may be necessary. However, the majority of businesses are looking for ongoing relationships, and can therefore afford to spend a bit more for a higher lifetime value.
The best example of this in action is AdWords. This platform makes the advertisers bid to secure traffic for their websites with the highest bidder being shown top. Those businesses who are willing to pay more are ones considering the lifetime value whereas others who see it as too expensive are thinking about single sale ROI or are running an inefficient business and therefore have low-profit margins. This is one of our specialisms so if you would like some advice here then please make contact.
4) Have a Robust Disaster Recovery (DR) Plan
It’s important that your business is prepared for various “what ifs” and working out ahead of time how your business could manage if certain scenarios did arise. A robust business should have a plan in place which covers all facets of the business operations, including your IT infrastructure.
Having a Disaster Rcovery plan in place can really help minimise the disruption during a disaster and allows the main business operations to continue or at least function, even if to a lesser extent.
Recent events, with people being asked to work from home if they could, really highlighted where a DR plan was important.
Those who had a robust DR plan were able to quickly transition to remote working whereas those without were left scrambling to secure hard-to-find hardware and cobble together new ways of communicating. We talk with all our clients about DR planning and resilience and deliver a robust control mechanism for implementing this on a recursive and manageable basis. Please give us a call to see whether we can help.
5) Check Your Insurance Protection
Insurance seems expensive until you have to make a claim. This is the indomitable truth of it. Through our own experiences and those of our customers, we have definitely seen the need for adequate insurance and periodic reviews with a good broker. There are so many different types of insurance that a business may want or need and navigating this without a knowledgeable broker is difficult. A robust business will have reviewed their obvious insurances and liabilities they are aware of and sought help to understand the ones they won’t have thought of.
We can’t help here but I would highly recommend Hugh J Boswell, based in Norwich, as a starting point.
6) Stress Test Your Finances
“Cash is king” is often cited as the mantra for all robust businesses and in my experience is the truth. Having positive cash reserves protects a business in so many ways.
Having reserves adds a buffer between you and issues of late payment or fluctuating revenue streams. Accountants can make it difficult to understand your business's financial position on a day-to-day basis and a large bank balance can come under attack when a Corporation tax or VAT return is due.
Call me basic but I am an advocate of having different accounts for PAYE, VAT, and Corporation tax, where allocations are made on a monthly basis so a trading account balance is a much better representation of your financial position.
Accountants seem happy for businesses to run quite lean in terms of cash flow but my personal view is having two months' revenue in cash across all accounts seems like a robust position. Stress testing involves running loss of revenue scenarios at varying levels and seeing how long a business can stay solvent in each scenario. This again became a reality for all businesses last year to varying degrees and has probably left most business owners much more wary and likely to consider stress testing as a regular necessary activity.
7) Systemise to Increase Efficiency
Businesses, in general, operate in a competitive market. Every business is looking for ways to reduce costs in favour of more profits, or to maintain competitiveness.
All businesses are looking to systemise for efficiency and control - and to make the point further, businesses are actually referred to as “organisations” for this exact reason.
A robust business has embraced automation and is likely to either be a market leader in their chosen area or are making investments to be a front-runner.
This is a key area for us as a business that we both deliver for our clients and fully embrace ourselves. We work very hard to deliver seamless systems that join all parts of a business together in order to maximise efficiency wherever possible.
8) Manage Reliance on Individuals
At some level, all businesses have a reliance on key individuals. In order to mitigate this, from a robustness point of view there are two things you can try to do – reduce the reliance on individuals and do all you can to retain them.
Systemisation helps to put business-operating processes into software systems reducing the need for key people to be ever-present for your business to run smoothly.
Conducting a regular assessment of skills required in the business and working to reduce single points of failure through training is an important activity to undertake.
In order to retain keep people, you need to ensure they are being rewarded in line with market salaries.
In these uncertain times, where unemployment is at its highest yet recruiting people has never been more difficult, being able to retain key staff members is a must. It is becoming more important to meet all the other needs of a staff member through benefits, engagement, and development plans.
The recent situation has made people more concerned about gaining a good work-life balance and less concerned about direct remuneration. This doesn’t mean you can pay less than you should but salaries alone won’t make your staff stay as all businesses are having to up their game to offer more.
9) Manage Overexposure to a Single Customer or Market
Managing your exposure to a single customer or market would definitely be teased out in your SWOT analysis as a Threat. Any business with a double-digit reliance on a single customer or a more than 30% reliance on a single sector has a risk to manage.
It might be that your product or service is only suitable for one market sector so you will be limited on any steps you can take to spread your exposure but there are other things you can do to mitigate the risk – such as carrying more cash reserves or working hard to secure contracts and stay very competitive.
We experienced this ourselves at the outset of Netmatters. 70% of our revenue was from the property sector and in 2008 when the market crashed, pulses were racing and we quickly learned to diversify our offering by pursuing customers in other sectors vigorously. We have seen many businesses who are growing fast due to a major new contract or on the success of a single customer that have eventually had issues when this revenue stream has dried up. Obviously, it’s almost impossible to turn work away, especially from a big customer, but ensuring you are not neglecting others is a risk mitigations tactic in itself.
10) Ensure Your Infrastructure Is Location Independent & Flexible
Flexibility is key to robustness. Being able to operate away from a single location helps with so many of the above areas. Most staff members love the opportunity to work from home and studies suggest productivity does not suffer as a result.
Having location-independent IT and communications infrastructure in place helps with resilience and makes for less disruption in the event of even the most major of issues.
We have adopted 3CX VOIP telephony to manage our business and is our preferred offering for our clients too. This is something we can definitely help all businesses with and talking to us before making a decision on selecting a new communications platform will always be worthwhile.
Implementing some, or all, of the above tips can help your business weather the majority of storms. Whilst we can’t predict the future, with these kinds of plans and processes in place we feel much more able to face whatever is thrown at our business and hope you can take some comfort for your own business by bringing these ideas into your business planning.
If you want to understand how Netmatters can help you with some of the above please don't hesitate to get in touch.
