More than a year after the UK entered the first lockdown, small businesses are still feeling the impact of Covid-19. With the easing of restrictions, we can hope that many businesses will bounce back, and the economy can once more thrive. But what can you do to ensure long-term recovery once this is all over?
In this blog, we summarise some of the key things that will help you succeed in the long-term.
1. Do a risk assessment
Firstly, we recommend looking at all potential risks in your business. Go WILD on this! Identify the likelihood of each risk happening, the impact it will have, and what actions you can take to mitigate them. Bear in mind that for some, there may not actually be a solution. By doing this, you can isolate which risks will benefit from your focus (usually the ones that you can control the outcome of, but that also have the most significant impact on the business).
Here’s a way you can structure this assessment:
|Risk impact||1 (Insignificant)||2 (Minor)||3 (Medium)||4 (Major)||5 (Catastrophic)|
2. Embrace change
In many ways, there’s never been a better time to challenge conventional ways of doing things. The pandemic has accelerated change across many industries and we’ve seen businesses that have reaped the rewards through operating differently in the last 18 months.
But change can be tough, both physically and mentally. Being aware of, and accepting that change is inevitable, can often help overcome it. Take action. Find someone who can help you through the period of change, and celebrate the changes you make. If you’ve never sought outside advice, now could be the time.
3. Take action
Remember that results are only achieved by making decisions, taking action, and implementation. As business coach Michael Sheargold says: “The power of an idea is in its implementation”.
How many times have you had a great idea, and it never came to fruition? What good is that idea if it remains an idea?
Embrace a test and learn culture. Give your business one new thing that you’ll test each month. This might be a new marketing tactic or a new invoicing process. Through your risk assessment you’ll be able to see what you can test for maximum impact.
4. Focus on what you can control
The things that are within your control are the things that you can directly influence – and therefore achieve the greatest results. Stephen Covey discusses this in his book, 7 Habits of Highly Effective people, and refers to it as the Circle of Influence. I wrote a short article about how to manage in times of uncertainty on my blog. Here’s a snippet:
Proactive Focus, focuses on the things we can control – our health, our behaviours etc. By working on the things you can tangibly do something about, the nature of your energy will be “positive, enlarging and magnifying”, which will grow your Circle of Influence, and reduce the Circle of Concern.
Reactive Focus, focuses on the Circle of Concern. Covey gives examples of other people’s weaknesses and the environment as two things that we often put a lot of energy into, but rarely benefit from spending time on.
5. Work on the business
Moving on to more tangible actions… As a business owner, make sure you schedule time into your week to work on your business. What do I mean by this?
As business owners, we can often get bogged down in the day-to-day activities of the business. However, we must ensure that time is dedicated to long-term strategic planning. This is where we choose to spend time working on the business, rather than in it.
If this is not something you have done before, it would be wise to start with two 90-minute sessions per week. You may wish to dedicate one session at the beginning of the week when you are fresh and full of energy, and a second towards the end, when you may need a change of pace or activity. I’m a few years into this and have a team, so I am now able to dedicate Mondays to working on the business (this is usually when I will speak to software partners, plan my week, look at my finances and check my forecast, it is usually when I focus on strategy work as well). Wednesdays I save for team meetings and training, and Fridays I save for low-energy tasks such as social media scheduling which, whilst important, does not require the same mental energy as the tasks I save for Mondays!
Remember as a business owner, that you also need to make time for yourself, outside of the business!
6. Identify the tasks that need fulfilling
We often refer to the 10 Hats in Every Business – these are the 10 ‘departments’ in every business, and even if it is just you, each of these 10 Hats will be worn. It is important to identify the tasks that each of these 10 Hats require, and ensure sufficient time is dedicated to them. The 10 Hats are:
- Shareholders (ie those that benefit from the profits of the business)
- Directors (ie the strategic decision makers)
- Product/Service Development
The latter may make you scoff… but HR is there to ensure the team is happy and looked after – remember the ‘oxygen mask analogy’ if you are doing it all on your own.
Obviously, if you are the sole member of your team in your business, you won’t have an HR department to ensure you and your team are happy and looked after. And therefore, you have to dedicate time to wearing your HR hat to look after yourself. This is where the oxygen mask analogy comes into play – on plane journeys, we are told to put our own mask on before assisting others, knowing it will likely save two lives, rather than losing both. It’s the same in business – a happy, rested, fulfilled business owner = a happy business. You cannot consider running a successful business if you do not have the energy to do what is needed.
7. Update and adapt your product or service mix
If you have seen a downturn in your business – what can you do to improve this? Are there services/products that just aren’t performing well enough to justify the financial and time cost? Consider whether it is worth:
- Trying to increase sales in existing markets
- Add new products/services to existing markets
- Sell existing products/services to new markets
- Sell new products/services to entirely new markets.
8. Consider your pricing strategy
Are you better off discounting your products to reach more customers? Or, should you increase your prices and get better margins on a lower sales volume? This will depend on your business model. There are some calculators available online to demonstrate the impact of increasing or decreasing your prices. The most important figure to have to hand when completing this exercise if your gross profit margin.
9. Put in place a marketing strategy
Get clear on your marketing and communication strategy. For example, it is extremely easy to get sidetracked in social media, but why are you posting? Who are you trying to reach? What is your end goal of the regular posting? Is social media even the best way to reach your target audience?
Creating a marketing plan can help you formulate your ideas and ensure you stay on track to achieve your goals.
In relation to Covid-19 and reopening your business, ensure you communicate the safety measures you are implementing – e.g whether your opening hours have changed, and whether your product/service mix has changed in any way.
10. Consider the people
If you work with a team of people, whether employed or outsourced, consider whether they still serve your business needs. Do you need to adapt some of the roles or introduce new ones? Remember the 10 Hats point from above and think about what help you might need if you are currently struggling to manage on your own. Whilst there is a cost to expanding your workforce, weigh up the potential rewards of having extra capacity – whether it’s being more productive or being able to capitalise on opportunities more quickly.
If you have a team, also consider their wellbeing. Regular check ins, encouraging downtime and balance are key to happy people.
11. Always keep an eye on your finances
Remember to look at your finances – both the business’ and your own. The first step is to review your own personal finances. We ran a webinar to help guide you through this process if you have not already reviewed things. Once you have a better idea of what you realistically need from the business, you can create your business budget. For more pointers, I wrote an Informi blog all about budgeting in times of uncertainty.
12. Look at your cash flow position
If you are struggling with your cash flow, consider the causes of it, and take action to improve it. Here are some areas to look at?
- Are your invoices being paid on time?
- Can you reduce payment terms, offer different payment methods?
- Are you paying more on your bills because you are consistently late and incur interest?
- Can you negotiate better terms with your suppliers?
- If you have stock, is this managed correctly? Unsold inventory is cash that is tied up in your business, and a huge risk.
- Have you reviewed your debt recently?
- Have you considered obtaining some finance through the government schemes to help with covid to obtain better terms on your debt?
- Have you reviewed your overheads recently? Consider cutting unnecessary subscriptions, negotiating better deals.
- Are your gross profit margins correct? Ie, are you selling your services/products at the correct prices for the costs that are incurred in the process of selling them?
- Are you selling enough?
Look at each of these things and consider what can be done to improve.
Bear in mind that these points are not specific to Covid – they are crucial to success if you have seen difficult times in the past year, but all of them are also important to sustainable growth for any business, wherever you are in your small business journey.