If you’re scared that the latest financial shake-up may lead to a second GFC, you’re not alone. Fortunately there are strategies you can employ to run a business in an uncertain economic environment.
The main thing to keep in mind is that you’ll need to employ a strategy based on both protecting your business from threats and being agile enough to seize opportunities. Minimising negative effects will keep your head above water, but accentuating the positive will ensure you can swim.
Here are five ways to keep your business afloat:
1. Reduce costs. This one seems obvious, but many businesses still pay for unnecessary overheads. Make sure your operations are as lean as possible by taking stock of the things that help you make money (directly or indirectly) and the things that don’t. Of the things that do, assess the ratio of investment to gain, and find ways of improving this figure.
Case in point: Many businesses invest a lot of money in technology where the ratio of outlay to gain is very low. One solution would be to find out how to leverage more for your dollar; for example, a serviced office runs on a unified communications system, which is normal for a corporation but a massive investment for a small business. Small businesses can access the equivalent equipment, infrastructure and support of a big corporation but without the costs.
2. Boost productivity. Work smarter; don’t slog through long hours. If you run an online business that’s ‘on’ 24/7, or if you’re the kind of business owner who will take a call from a client during dinner, then you need to find a better way of shaping work around your life. Not only does having a work/life balance make you more productive when you are at work, it also means you’ll enjoy your business more.
If you can’t afford staff to man the phones 24 hours a day—and let’s face it, not many of us can—consider a virtual office where a receptionist will answer calls according to your instructions. This way you know that your business calls are not going to voicemail, won’t ring out or be picked up by your kids. You can even choose to filter out certain calls and let through more important clients. This also helps if you need someone to take care of day-to-day operations so you can spend time working on the business rather than in the business.
3. Increase flexibility. If you are flexible, it is easier for you to take advantage of opportunities. This means you should position yourself for growth, whether that’s the size of your staff or the reach of your company.
Does this sound familiar? In uncertain times, commercial landlords are likely to tempt you with long-term leasing arrangements that seem like a good deal. Consider instead whether you can tell how much your business might grow in three years. Will you be the same size? Will you still be in the same location? Being restricted by a business decision you made a few years ago will stifle growth, so ask yourself how your business can be more open to opportunity.
4. Consider outsourcing. There’s an increasing trend towards outsourcing and having a ‘modular’ business, and for good reason. Firstly it makes you more flexible because if something isn’t working then it’s easier and less destabilising to change than an in-house department or staff member. Secondly, the businesses you outsource to are going to be specialists, usually small businesses themselves. Outsource the functions you’re not good at, or that aren’t cost effective for you to have in-house and make sure it’s scalable.
For small businesses, outsourcing answers the questions of how to have more staff for less money, have access to space but not pay rent and have access to technology without investing in expensive equipment and services for dubious return. Outsourcing gives you those things—and you only pay for them when you use them.
5. Build your market position. If you think like a small business, you may forget that there are other cities and countries out there that could be potential markets. Remember that taking advantage of opportunities is one part of insulating your business against a downturn: a diversified business—whether that’s diversifying your offering or your clientele—is about spreading your eggs across more than one market.
A virtual office allows you to test the waters by enabling you to build a presence in a market, complete with a local address and phone number, without too much outlay. A client from Texas was importing luxury goods from France to the USA. He had a virtual office on the Champs Elysees and shipped the goods via this address. He said his relationship with his suppliers changed once he secured a French address: they were more comfortable doing business with him. He has since moved to Paris and now runs operations with a virtual office in Texas, but it doesn’t matter to his customers or his suppliers where he is geographically as long as he has a presence in both cities.
A serviced office can save you time wrangling with bureaucracy so your business is up and running from the moment you land. You’d probably be surprised to learn that in a country like China, which is generally supportive of businesses, it can take three months to secure a phone number. In a serviced office, it’s all set up for you: the infrastructure is there, the technology is there and you’re ready to go.
The key to avoiding the effects of an economic downturn really boils down to your ability to adapt to the environment. Businesses that can do this are generally lean, efficient and effective, flexible and agile, and opportunistic—is yours?
– Marcus Moufarrige is the Executive Director of managed workplace solutions provider, Servcorp.