Business Advisory Directors Jane Fenner & Paul Mannion share their top 5 strategies to help your business succeed in 2021.
The events of 2020 affected our lives in immeasurable ways, with the impact on the economy and business sectors being profound. As we start the New Year and look forward to positive changes and economic recovery (already against a backdrop of political unrest in the US), we have collected our top 5 strategies for business success for 2021 by borrowing from some popular political quotes from a more inspirational period of US history.
1. “By failing to prepare, you are preparing to fail” – Benjamin Franklin
First and foremost, reflect on the last 12 months and ask yourself: What worked & what didn’t (both for your business and for others operating in your space)? Use that information to develop achievable business goals for the year ahead. Break these down into smaller, actionable projects, that will guide your next steps.
By defining your goals, you are setting the priorities & direction of the business for the year ahead. Clearly communicate these goals and projects to stakeholders to drive alignment and assist with decision making. Revisit regularly throughout the year to measure achievement and adjust as required.
2. “Change is the law of life and those who look only to the past or present are certain to miss the future” – John F Kennedy
The events of 2020 have changed the way consumers live their day to day lives, which means that businesses need to adapt their business models & offerings to ensure that the changing wants and needs of customers are being still being fulfilled.
Ask yourself; Is what you are selling still relevant? Is it necessary? Is it easily accessible? Am I delivering it to clients in the most efficient way? And can I be certain that my supply chain is secure and reliable? If the answers to these are no then you need to adapt and do so quickly to ensure your business’s survival. The requirement to evolve exists at all times in a business’s life cycle but is always more pronounced in periods of rapid change in economic conditions (like now).
3. “We must consult our means rather than our wishes” – George Washington
It is crucial to establish a cash flow budget and stick to it by controlling your spending. Maintain a rolling short term and long term cash flow projection and update it often, so you know where the funding gaps are. Our hot tips:
- Introduce an approval system in relation to any non-budgeted cash spending.
- Consider capex spending carefully before signing that contract! Is the capital item critical to operations? Is the return on investment worthwhile?
- Do not bankroll your customers as they will expect it forevermore, so have tight terms and move towards automated payments as soon as you can.
- Manage your payments – make use of the terms available and only consider early payment if you can take advantage of early payment discounts.
- Manage your stock – monitor stock movements carefully and forecast these out in advance based on seasonal or historical trends, so that optimal order quantities are placed at the right time, via the most economic means.
- Create a cash buffer to deal with unforeseen events that may temporarily threaten the ability of your business to pay its debts as they fall due.
4. “Today, our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change” – Martin Luther King Jr
If 2020 taught us anything it is that ‘business as usual’ can change in a heartbeat. Business owners need to carefully consider the challenges that have emerged in the previous 12 months and prepare to overcome, or perhaps even take advantage, for future long term survival.
If your business model relies on importing materials or goods from countries overseas where production and logistics were heavily impacted by COVID, you should consider strengthening your existing supply chain by sourcing alternative suppliers in other foreign jurisdictions. Another option is to consider relocating some critical production to Australia in order to ensure the business can stay agile during uncertain times.
Where your business has experienced a downturn in customer numbers or revenue, consider your current and future resourcing and staffing requirements. You may need to hold off on planned projects or review your headcount in order to ensure you can continue to operate until there is more economic certainty. Consider options that provide flexibility to manage headcount quickly.
If your online presence is weak or non-existent, 2021 is the year to invest in your digital footprint. With stay-at-home orders expanding exponentially and decreasing foot traffic through bricks and mortar retail premises, it is crucial that customers can deal with you online. Invest in targeted marketing strategies (with a successful return on investment) to make it easier for your customers to find you. Develop a user-focused website with customer experience in front of mind. Get paid faster by including an end-to-end e-commerce facility to take online payments for goods and services upfront.
If you have successfully introduced working from home arrangements, consider how this may impact the way you deal with your team into the future, and what challenges may have been created that now need to be properly managed. Additionally, consider the impact this may have on your requirement for business premises. For most businesses rent is a material cost of operation.
Review existing lease arrangements and develop a medium and long term plan that accommodates the new normal. If you no longer need the floor space, approach your landlord to negotiate adjusting your lease terms, where possible.
5. “The most terrifying words in the English language are: I’m from the government and I’m here to help” – Ronald Reagan (Yes, not just an actor)
Stay on top of Government announcements in relation to business stimulus and targeted support packages to boost economic recovery. Ensure you understand what is available, how that might compliment your activities outlined above and confirm your business meets eligibility criteria to take advantage of the assistance whilst it is available.
Overall, the key to business success in 2021 is to remain resilient and adaptable, be vigilant in measuring and interpreting business performance and be well prepared to take advantage of opportunities arising from either continued turbulence or a gradual economic recovery. For a checklist to assist in setting your business up for operational and financial resilience, you can refer to one of Nexia Australia’s earlier articles located here.
If you require assistance to create a clear plan for success and business growth in 2021 or have any questions about the issues raised in this article, reach out to your Nexia Edwards Marshall NT advisor.