Remaining competitive in an ever-evolving marketplace can be challenging for any business. The threats to financial stability are numerous; ranging from economic downturns, geopolitical events, supply chain failures and cyberattacks. Weathering these global and domestic storms requires businesses to develop effective strategies that allow them to react, adapt and thrive despite the conditions they encounter.
While most executives view resiliency as a critical business imperative, only 47% believe their organization is resilient, according to a recent poll by SAS. This highlights a significant gap that must be addressed for businesses to feel adequately prepared to handle unexpected shocks and disruptions. In this article, we outline several strategies businesses can implement to enhance their resilience, enabling them to successfully navigate turbulent times.
Expect Disruption
Businesses today face a broader range of potential threats compared to previous times. The interconnected nature of our global economy can present challenges for business supply chains while greater reliance on technology has introduced the need for vigilance against cyber threats. According to the World Uncertainty Index (WUI), the world faces greater geopolitical and economic uncertainty today, as recent events across the globe have shown.
Businesses that fail to prepare for such eventualities are preparing to fail. By considering scenarios or events that could impact their operations, business leaders can position themselves more favorably if or when they occur.
Plan Accordingly
Businesses should keep a pulse of the business environment they operate in by informing themselves of potential factors that could affect their organizations. This can be achieved by:
- Leveraging various sources of information, including economic indicators such as GDP growth and inflation rates
- Obtaining expert insights on consumer trends and industry forecasts
- Reviewing internal data sources like sales and supply chain data and marketing analytics
By doing so, businesses can assess their own capabilities in responding to these factors and implement scenario planning and training workshops to enhance their preparedness to deal with them effectively.
Sound Financial Planning
Sound financial planning can help businesses bolster themselves during turbulent times. Healthy cash reserves can provide liquidity, enabling businesses to meet unexpected expenses and maintain their operations during times of economic downturn. Reviewing areas of their business where costs can be cut can also improve financial efficiency and reduce reliance on external sources of funding or the need to incur debt.
In contrast, poor financial planning can undermine a business’s ability to pay its staff, and suppliers and cover its operational expenses on time. A high debt-to-cash ratio can also create financial difficulties during times of financial turbulence making it difficult for a business to maintain its loan repayments to creditors which can lead to missed payments or credit default.
This can potentially result in legal action from creditors as they seek to recover amounts owed to them, increasing the risk of business insolvency. If you have decided to wind up your company due to financial distress or difficulties, the experts at BABR can work with you to manage each step and guide you through the process.
Diversification
In addition to current methods of generating income, businesses can increase their chances of successfully navigating turbulent times by diversifying their revenue streams.
Over-reliance on a single service or product can leave a business vulnerable to changes in consumer demand or market conditions. By developing new products or services that have a low correlation with existing ones in terms of demand, businesses can spread their risk and ensure an income stream when their main one faces challenges or setbacks.
By implementing these strategies, businesses can improve their resiliency and better safeguard themselves during turbulent times.
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