This article was guest authored by Mark Lenhard, CEO of Invoice2go.
The past few months have presented some of the toughest challenges many Australian small business owners and contractors have, and perhaps will ever, face. From extended lockdowns and social distancing restrictions to customer disruption and economic hardship, much of the small business community’s attention has been focused on adapting. Despite the challenges, though, the defining theme has been one of resilience, innovation and dynamism as small businesses find new and inspiring ways to operate in the ‘new normal’.
However, with the reverberations of the ongoing pandemic set to continue for some time, there are many questions that small business owners must address during their medium- to long-term recovery. Whether it’s to scale up or streamline, diversify or go back to basics, if you’re a small business owner and are feeling uncertain about the coming months and how to tackle them, we’re here to help. Irrespective of your location or industry, here are some considerations to help you assess your business’ health as you plan for the medium- to long-term.
Scale up or streamline?
Developing a comprehensive understanding of your business’ cash flow is an important first step in determining your current foundation and what may and may not be plausible in the coming months. Get a solid grasp on your reliable income by studying your cash flow with both an annual and monthly view. Annually helps you understand your overall financial position and whether you’re able to cover costs such as regular wages and rent, and also takes into account any seasonal fluctuations. If you own a pool care business, for instance, it’s likely that demand for your services will be much higher during and ahead of summer, while winter will be a quieter period. Monthly, meanwhile, will inform whether you have reliable cash flow to cover any additional running expenses. When combined, these two financial assessments will help you determine one of today’s pressing questions: scale up or streamline?
Next, take a look at your current workload and any confirmed projects. Irrespective of your industry, it’s likely that your business finances fluctuated greatly during this volatile period. However, with the exception of Victoria, states, industries and businesses are beginning to venture into the ‘new normal’, so it’s an opportune time to forecast your work over the coming months. If you’re expecting to have more work than before the pandemic like, for example, an IT support specialist, it might be time to scale up by hiring an employee to cater to the increased demand. If work is likely to slow, it might be time to streamline costs by, for instance, finding a smaller office, cheaper suppliers or even engaging freelancers rather than permanent staff. Whatever you determine, it needn’t be a permanent measure, but a temporary solution to boost your flexibility in the short- to medium-term.
Your business’ ability to succeed is dependent on your ability to engage customers. Encouraging repeat business is a great way to reduce costs, with research revealing that it costs five times more to acquire a new customer rather than retain an existing one. If you notice a growing base of loyal, satisfied customers who love your business, it could be a sign that you’re ready to expand. If, though, your cash flow and growth is slow, don’t try to do too much – instead, a simple email or call to your existing customers could be all you need to grow in a more considered, sustainable fashion for the time being.
Back to basics or diversify?
The pandemic has forced many businesses to reassess and even pivot their offering to ensure it meets the needs of today’s consumers. For example, some graphic designers might now by providing social media services, and some landscapers offering a more comprehensive home and garden service. Others, meanwhile, have returned to their roots to offer a simplified version of their business in an effort to operate a more time- and cost-effective business. When making this assessment for your own business, it’s important to think about your long-term goals. Consider the customers you want to serve and the problems you want to solve, and how this fits into the ‘new normal’ of your business.
For instance, if you’re an Australia-based graphic designer and your contracts are slowing, you might look to expand your services to other areas or even geographies. Or if you work in commercial construction, consider how you could focus on residential work at a time when many offices have been replaced with home offices. If you’re diversifying your offering – in any way – it’s important to do your research and be confident you can do an impressive job. After all, branching out into a new market could do more harm than good if you don’t speak the local language or can’t adequately fulfil a brief. For others, back to basics is the fastest way to recover. If you’ve built a fabulous long-standing reputation as the best tailor in your town, perhaps now is the best time to focus solely on your alterations, rather than opening a new retail store.
Regardless of your strategy, make technology your key competitive advantage. Whether it’s researching or engaging contractors online or using electronic payments to avoid unnecessary handling of cash, many consumers are prioritising digital solutions during the pandemic. So no matter if you’re scaling-up or streamlining, diversifying or going back to basics, ensure you’re relying on technology to streamline and empower every aspect of your business. Technology exists to simultaneously simplify and enhance your operation, whether it’s simplifying the payments process or better understanding your customers’ habits, which might be exactly what you need in the coming months.
There is no one-size-fits-all approach to the coming months; it’s about assessing your business candidly, and doing what you think is both comfortable and feasible. Despite the uncertainty, and potentially lingering concerns, by thinking constructively and weighing up your options, you might find that a clear path to long-term recovery begins to present itself.
Mark Lenhard is the CEO at Invoice2go, the mobile invoicing app that gives small businesses and contractors control over their time and business. For more visit http://invoice.2go.com