Business resilience: Strategies to help you succeed in uncertain times

No matter what kind of business you run or what industry you’re in, setbacks are part and parcel of being an SME.

This doesn’t mean you can’t set yourself up for success to weather these setbacks, though.

This is what it means to have business resilience. By building a solid, adaptable foundation, you can future-proof your business to ensure it withstands even the most testing challenges.

Data shows that small businesses are falling behind GDP

GDP (Gross Domestic Product)  is the total value of all goods and services produced within a country, and acts as a key indicator of that country’s economic health. A growing GDP usually indicates a thriving economy, while a shrinking GDP can signal economic challenges.

GVA (Gross Value Added)  is a measure of the value of goods and services produced in a sector, after deducting the cost of inputs and raw materials. It reflects the contribution of each sector compared to the overall economy.

MYOB recently released its new SME Performance Indicator at the Australian Conference of Economists. This report reveals that the small business sector in Australia is declining in terms of economic performance compared to GDP. The industries most impacted by this are construction and retail. Construction GVA  has been down 5% over the past 12 months, while retail has been down 10% over the last 2 years.

Retail’s decline may not be surprising to many, given the current cost-of-living crisis. On the other hand, the construction industry’s lack of growth could be due to a number of potential risk factors, including labour shortages, material supply constraints, and high construction costs.

What is business resilience?

In recent years, Aussie small businesses have been tested and challenged repeatedly. But what really separates successful, thriving companies from those that fail and are forced to close their doors?

It all comes down to resilience. Does your business have these three key elements of resilience?

Adaptability and flexibility

For any business to survive, it must remain flexible and adapt to changing market trends, customer habits and global influences. Any business that cannot pivot quickly enough runs the risk of failure.

Just look at the well-known example of Blockbuster. The massive global video rental chain had the opportunity to buy its competitor, Netflix, back in 2000. They declined the offer, stating that the price Netflix wanted was too high. But Blockbuster also failed to realise that the market was changing, and that there was ample opportunity for startup companies like Netflix to completely disrupt the entertainment industry – which, as we all know today, they did.

Now, Netflix is a global household name, while Blockbuster is nothing but a nostalgic memory.

Financial stability

A solid financial foundation is crucial for business success. When you’re able to manage your finances effectively, you can make sure you’re prepared for just about anything. Some of the ways you can maintain financial stability and transparency:

• Maintaining cash reserves for those off-peak periods or sudden downturns.
• Ensuring you always have access to credit so you can seize new opportunities when they arise or cover unexpected costs.
• Monitoring income and expenses closely for effective cashflow management, ensuring you’re always able to prioritise the most important payments first and avoid shortfalls.
• Reducing your debt by consolidating loans or renegotiating terms.

Strong leadership and a vision for the future

The right kind of leadership is integral to the daily operation and continuing success of a business. No matter whether you have 20 employees or just one, the right kind of leadership matters – especially during times of downturn. Good leaders inspire and motivate those around them, contribute to improved productivity, and help others feel empowered even during difficult periods.

On the other hand, poor leadership can lead to higher employee turnover as well as decreased productivity – things that may cost your business money in the long run and erode your business’s resilience.

Practical steps for remaining resilient

What kinds of strategies could help you withstand potential risks and maintain stability during difficult periods?

Building a resilient business requires a solid foundation as well as practical, day-to-day actions. The steps below may help inspire you to think about how you can shore up your business to prepare for challenges, risks and downturns.

Diversify revenue streams

By diversifying your revenue streams, you can reduce your dependency on a single source of income. Exploring new markets, introducing complementary products, and offering additional services are a few ways to create multiple income channels. For example, if you have a brick-and-mortar retail shop, have you considered opening an online e-commerce store?

Multiple income channels allow you to remain flexible and adapt to rapid changes. And if one income stream dries up, you still have others that you can rely on, ensuring your business’s ongoing success.

Leverage technology and innovation

What are the newest emerging technologies in your industry? Are your competitors already taking advantage of these new innovations? What are the latest trends that are likely to disrupt the industry in the next few years?

Love it or hate it, embracing automation and technology in the digital age is one way you can help ensure your business remains resilient and does not fall behind the pack.

Think about implementing new tools that allow you to streamline operations and provide valuable data insights that can help with decision-making. Consider automating repetitive tasks, freeing up time for other high-value tasks that benefit the business.

Build strong partnerships and networks

Building and maintaining strong relationships are vital for any business – whether they’re with suppliers, third parties, other businesses, industry leaders or customers. Being proactive here can help you establish the foundation of key relationships, which can allow your business to thrive and remain resilient during tough times.

Fostering strong relationships with your suppliers can help to ensure reliability and consistency, and may even lead to negotiating better terms. Customer engagement is important for any organisation, regardless of your industry or customers, as it can cultivate brand loyalty and repeat business. And collaborating with others in your industry can open the door to new opportunities, such as new business ventures or joint marketing endeavours that expand your customer base.

Plan for the future

Creating a business continuity plan can help you plan for the unexpected. A business continuity plan is an important part of long-term business resilience, as it provides a detailed blueprint for crisis management when things don’t go as planned.

A comprehensive plan should align with your business’s goals while also incorporating risk management strategies to mitigate potential problems. One way you could consider doing this is by assessing and updating your insurance.

Insurance can play role in building resilience, as it may help to mitigate risks and contribute to business continuity during challenging periods. Business insurance is there to help protect your business against such things as property damage, liability claims, business interruptions and more. This is why many SMEs consider business insurance as a way to protect their interests and ensure their business’s ongoing success.

To compare insurance from Australia’s top insurance providers, make sure you visit BizCover online to get a quote in minutes. For on the go cover, go BizCover and compare insurance quotes today.