The year 2023 started with high hopes and lots of expectations, but a lot of businesses have been on the receiving end of some major shocks. We went from the naira scarcity, to the exorbitant fees one pays to access cash (both in cash and time), business shutdowns due to protests and security concerns. Then there was also the concern of whether to accept old notes as means of payment or not; and later also having to deal with delayed and unsuccessful transactions.
Some roadside businesses have been shut for as many days as they have been open in 2023. Fact is, any business that was not wired to withstand such shocks will have their numbers affected. Amid all these, there are businesses that have had it good. Sales have continued to come in, maybe even more than before. What are they doing differently?
The word is Resilience.
Business owners must consciously build businesses with models that can withstand any shock. Do you remember COVID-19? There are businesses that went under when the pandemic hit, but there are businesses that also rose swiftly in the same environment.
If your business has been negatively affected in any way this year, this article is for you. Here are 5 things you can start doing right away to prepare for the next wave, whether it be an environmental change, policy change, or even change in customer preference.
You must take the painful task of optimizing cost in your business. The goal is to satisfactorily meet customers demands, at the lowest cost possible, and keep them returning and cut down the cost of acquiring new customers.
Go through your inventory, monitor all your receivables and expenses, renegotiate for better deals where necessary. If it is possible to bulk purchase at a reduced unit and logistics cost, why not explore it? If it is possible to partner with another business to place orders, and reduce the brunt of logistics, why not explore it too. What if it is possible to get something of a higher quality at the same price?
Ultimately, you must ensure that you do not compromise on quality while you are at it.
Assess your assets.
Another thing you should do is to assess unproductive assets that continue to incur overhead costs without a corresponding impact on revenue. You may decide to dispose of them by selling, or even renting it out to bring in extra revenue.
For example, if you have a big industrial machine that is taking up space in your location, and yet you only get to use it one or two days a month, this could be a good time to reassess and decide what to do. Can you sell it off? What if you have a rental service where people can come use it in your premises and pay for the time? What if you employ a staff to man the machine, and begin to get deals to execute with it?
Once you do your assessment, you may begin to see that some of your assets take more out of the business (expenses), than they bring in.
Deploy the right technology in your business processes
Back in 2019, notable auditing firm KPMG stated that deploying the right digital strategy and technologies is one of the best ways to prepare against economic headwinds and the threat of recession.
While this is one way to cut down on overhead costs, it is more helpful in reducing incidence of errors and manipulation in sensitive stages of production. Not every business can deploy technology to every activity, but you should examine your structure to see what and where it is possible. Business structure experts will also confirm to you that this can stop cases of employee theft or frauds. If you cannot automate anything else in your business, do all you can to automate payments and cashflow.
Tap into other growth areas
Do you know that a single policy from the government can put you out of business? Yes indeed. It could be a policy banning a product or service. While this isn’t something you hope will happen, it is necessary to shock-proof your business against things like that. One way is to explore and tap into other growth areas.
As important as it is to niche your business, you should also keep your ears to the ground and explore other areas of growth as they come up. If you import and sell animal feed, for instance, it may not be out of place to explore local production over time. Africa’s richest man, Aliko Dangote was once an importer of Cement, before he eventually went into production. You may also want to look into selling complementary products and services too. If customers buy laptops from you, and then ask where to get it’s accessories, you may also consider tapping into that.
You do not want to take on more than you can chew at any point, but it is important that you keep researching and taking note of related growth areas in your business.
Stay up-to-date with Business and Economic news & trends
No economic or business policy falls from the sky. In the months or weeks preceding the adoption, there is always news or speculations to show that such a policy is in the works. So, if any policy takes you by surprise or affects your business, it means that you have not been actively seeking out this information like you should.
Now, do you know what bills are being considered by the Senate Committee on Industries, or the Senate Committee on Business and Rule Committee? What about the House Committee on Commerce? What are the government’s plans about Small Business and Entrepreneurship? What projects are being considered? What discussion and negotiations are ongoing?
As an entrepreneur, staying up-to-date is serious business, more serious than going on social media to jump on every trend. You cannot prepare for what you do not know or expect? Discussions on the cashless policy for Nigeria has been on for years, and if the policy took you by surprise, it means you have not been getting the right information.
You cannot be standing in a river, and let soap get into your eyes. This is the reason you have a platform like Smartpreneur.ng . Make it a daily habit to check out the latest economic news, business trends and analysis, to see how it may or may not affect your industry.