A business leader’s role is not just to drive profits, growth, and performance within a firm – it is also to build stability, sustainability, and security for shareholders and investors.
This means looking at areas around which your firm might take on risk and putting in place protective mechanisms that’ll help it ride out the road bumps on your path ahead.
In this short piece, we’ll look at the ways in which you can protect your business, reduce the risk associated with your business, and securing your firm from harm and damage in 2021.
1. Cash flow
The most common reason that startups fail is due to cash flow issues.
But in today’s world, where coronavirus is altering consumer spending habits on a big scale, the issue is far more widespread, as companies that were used to certain monthly sales are now scrabbling to access cash that’ll keep them afloat. In this difficult and dangerous time for businesses, keeping track of your cash flow is paramount.
Download apps that help you process financial data instantly and use your CFO and financial team to model future scenarios for sales, profits, and losses as we head into 2021.
If upon looking into this, you discover that your cash flow isn’t as good as you would like it, then you need to set about taking some steps to improve your cash flow.
The first thing you need to determine is where you are facing major problems. You might find that your cash flow issues lie with the lack of sales. So start by conducting some market research. Are your products or services priced too high or too low?
Are you targeting the right audience or reaching out to them on the right platforms? Have you been keeping an eye on what your competitor has been up to? All of this and more can make a difference in the sales you make.
It might even be that you are attracting the customers, but they are buying from you once and never returning. If so, could you start up an email marketing campaign with special offers that retargets these customers and builds up interest in your brand again?
You might find that your customers want a little bit more from you, so can you start offering new products or services? Maybe you can expand on what you are already offering instead. By doing so, you are expanding your audience base and improving your chances of building a better profit from sales.
Just make sure that you are then sending out your invoices immediately. Waiting around for a client to pay you can make a difference to your cash flow projections.
With considerations of how you can make more money, you should also start thinking of saving money. For example, is there anywhere in the business where you can make a few cutbacks until your cash flow is more to your liking?
If your business can be conducted solely online, do you need to pay a hefty monthly rent on your office space? Over the course of a year, this money you are saving on rent could be put towards marketing efforts that, in the long run, could bring you a great ROI.
When looking to save money, always think about the long term impact. For example, if you want to change to a cheaper supplier, will this impact the quality of your goods? If you start producing lower quality products, this could further damage your reputation and your sales figure.
There are a variety of different insurance packages that businesses should take advantage of. Covering legal fees, for instance, with E&O coverage will mean that small mistakes and omissions in your legal framework and contractual agreements can be hashed out without costing your firm dearly in legal fees.
Other forms of coverage are worth looking at, too – like straight-forward business insurance. The key to getting an insurance package that protects your business is to anticipate worst-case scenarios and to plan for their occurrence through the right policies.
Always check with your provider for the small print that might invalidate future claims.
Many firms reinvest their profits into their company in order to facilitate growth. This means that whatever they scoop off in profit is invested back into building a larger business, marketing your products more aggressively, or building new and more resilient parts of your business.
The advice, with 2021 looming, is to reconsider how you invest in your company.
Now is the time to make measured and safe decisions about how your company uses its excess cash. This is not the time to embark on a huge growth project.
Bide your time, invest in resilience, and make your firm more secure.
4. How to choose your investments
Choosing your investments wisely is incredibly important. You could start investing in areas completely separate from your business, such as real estate and the stock market, or even peer to peer lending, which could help you bring in another avenue of revenue that allows you to then invest that money into your business.
However, if you are unsure of which avenue to go down, you should seek out expert help. While nothing is guaranteed in investments, gaining professional assistance will ensure your money will not go straight down the drain, leaving you in a worse position.
Even if you are considering investing in yourself, you could benefit from seeking help from the experts. For example, marketing is not a one-trick-pony. There are different areas that you could invest in, but not all will be right for you.
Your business might benefit from investing in traditional marketing, while another would benefit from outbound marketing and digital marketing.
If you lack customers on your website, you might need SEO and content marketing to drive that traffic back. If you want to see an ROI, an expert will be able to direct you towards the right type of marketing you need.
5. Legal Protection
Law is a part of the business that most business leaders are ignorant of. That’s fine. If you’ve studied business and economics, you’ll not have spent a huge amount of time covering the expansive and tricky world of law.
But it is imperative, with the challenges of the new era, to think hard about how you can protect your firm from legal disputes in the future.
Whether these disputes are around employment law or the way you might be exposing staff and customers to health hazards if you’ve not put in place adequate coronavirus protection measures, avoiding legal disputes is incredibly important for firms looking for security in 2021.
To ensure your building is Covid-secure, you first need to carry out a risk assessment to help you understand how you can protect your employees. Some of the important measures you need to implement the following:
- Social distancing: It might help to place visible lines that remind your employees about keeping their distance.
- Cleaning: Your building needs to be kept extremely clean; you might benefit from bringing in professional cleaners every night.
- Providing hand sanitizers and soap: Provide all of your employees with the appropriate handwashing essentials to ensure they can keep your hands clean throughout the day.
Make sure you are as open as possible to your employees about the measures you are putting in place.
There you have it: four important ways in which you can protect your firm from damage, financial difficulties, and legal challenges in the future.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.