Future-proof your business with the aid of our four pointers
You don't need a crystal ball to see how your industry is changing. The patterns are often right in front of your nose; it’s just a matter of detecting them. We can't predict the future, but we can definitely prepare our businesses for future challenges. Here are four pointers you can use to future-proof your business in a better way.
Don't rely on a single part of your business – diversify
Many companies have a product that sells really well, especially if they're active in a niche market. Even if the product is really popular and is on an upward trend, it's a risky situation to be in. The same thing goes for businesses that have many customers per se, but where one of their customers constitute more than 50% of the company's total revenues.
It often requires diversification to solve this situation, i.e. that the company devotes its assets to focusing on more products, even though the current strong product would probably have provided greater returns if the assets were instead invested in that product. The aim is to provide results in the long-term and reduce the risk the strong product entails. Sometimes, this advice runs contrary to the many pointers we hear about focusing on one small part, a niche, to achieve success. But while this advice remains sound when setting up a business, focus must be spread across more areas if a business is to have a greater chance of surviving long-term.
Diversification is not always simple, especially not for small companies who want to focus on growth. However, the fact remains that the best strategies for sustainable growth are to be found in diversification, and so we recommend all companies to spend time and resources on it.
Identify risks and begin to address them
Predicting the future is not the easiest job in the world, but with a clear plan you can reduce the risks that may have a negative impact on your business. What we were just talking about – the uncertainty involved in only having one or a couple of products – is a clear risk that many companies can address. But how can you detect and address the risks that are relevant for your company? Here's a five-step process to follow:
- Identify the risks
It’s important to devote resources to detecting your risks. There are probably both apparent and hidden risks, and both categories are equally as important to identify.
- Minimise or eliminate the risks
Once you have identified the risks, create a strategy for minimising them.
- Identify who must do what if a mishap occurs
The best way to recover from mishaps is to prepare for their occurrence. For example, it might entail a loss of data, a public controversy or similar. Here's a checklist to use if a mishap occurs.
- Communicate the plan to every party concerned
Make sure everyone in the company is aware of what happens when a mishap occurs. Also involve your employees in efforts to identify risks.
- Have a plan for ongoing risk management
And don't forget to have a plan for addressing future risks. Your business is not static; it's always entering new collaborations, releasing new products and engaging new personnel. Make sure you work constantly with risk management.
Study your customers, and listen to what they have to say
We entrepreneurs are often so busy with product development, sales and marketing that we entirely forget the most important success factor – our customers. To future-proof your business, you must focus on how your customers and their behaviours appear and how these things may change in the future.
Many companies failed to take the risk of Internet commerce seriously. We don't need to look further than Netflix and Blockbuster to see how great the difference is for a company that succeeded in identifying new customer behaviours (people increasingly wanted to watch films by downloading or streaming them, rather than physically renting them). Companies that succeed in identifying these shifts in customer behaviour are those best equipped for the future.
To succeed with these efforts, you should carry out regular surveys of your customer base. What do your customers like about your products? What do they want to see more of? What other products do they like? Don't forget to talk to customers whom you've lost! Why did they choose to leave you and what could you have done to prevent it? If you take an interest in your customers, you'll enjoy a greater chance of keeping them in the future.
Carry out a thorough business intelligence analysis
This is intimately connected with the previous item in that it's important to broaden your outlook and not only focus on what you produce and sell. It's crucial that you also keep tabs on what your competitors are doing and what is happening in society in general.
For example, 20 years ago it would've been difficult to convince camera manufacturers or game developers that their biggest competitor a few years ahead would be mobile telephones. Once, Kodak was a company worth more than a billion dollars, but in 2012 it was forced into bankruptcy. The point being, that it's not only important to know what's happening inside your industry, but also in closely related industries in order to recognise both risks and opportunities.
Your future starts now!
Things change quickly. Both technology and society change year by year, and what is popular today will not always sell next year. Make sure your business is future-proof by following these pointers. Feel free to contact us to talk more about how to future-proof your business!