Future-Proofing Your Small Business
Starting a new business is never easy and always comes with its risks—but if the pandemic taught us anything, it’s that you must always be prepared for what the future might bring, especially if you own a small business.
Future-proofing is crucial if you want to ensure the longevity of your small business. This process of strategic planning allows your business to better adapt to the many ups and downs that may come your way and optimizes your operations to promote success for years to come.
No one can predict the future, but future-proofing allows you to better plan for it and weather the storms with more ease. So, let’s take a look at some of the strategies below to help get you started on your path to future-proofing your small business.
1. Smart Budgeting and Financial Planning
One of the biggest reasons small businesses fail is due to a lack of capital, funding, or failure to generate enough revenue. As such, one of the first things you should look at when future-proofing your small business is your budget and financial plan.
If you’ve done your research, you should know that most small businesses take almost two years to become profitable, sometimes more than that. And if any major setbacks happen during that time, it could end up taking you under before your business has even had a chance to get on its feet.
So, smarter budgeting and planning can help you avoid any major downfalls. For small businesses, this means creating a more functional budget that covers your finances for a specific period of time.
Unlike a master budget, which is more of an overall big-picture budget, a functional budget helps you break things down so you can see how money is being used specifically for each activity, area, or process within your business. This allows for better money management and allows you to better plan for the future.
2. Risk Management
Risk management is a crucial part of future-proofing any business, but it is especially critical for small businesses. Every business comes with its risks, but the risks you take as a small business can have even more of an impact because you have less to fall back on if something goes wrong.
So if you want to avoid taking too many risks, especially ones that could come back to bite you in the future if something happens—like a worldwide pandemic shutdown—then you must start learning to better identify and manage risks.
Risks come in many forms, such as:
Once you've learned to identify the potential risks that your business could face, you can start being more mindful going forward about the decisions you make and how to mitigate future risks.
- Physical risks: Risks that could cause physical harm, such as structure or organizational risks that could cause a fire hazard.
- Location risks: Risks that come with the location of your business, like flooding, winter storms, tornadoes, etc.
- Technology risks: Risks related to the technology you choose to use for your business, such as issues with WiFi, cybersecurity risks, or technology that fails or doesn’t work properly.
- People risks: Risks pertaining to the people you hire to run your business.
- Strategic risks: Risks that come with making certain strategic decisions about how to run your business.
3. Increase Employee and Customer Retention Rates
Poor retention rates, both where employees and customers are concerned, can play a significant role in the future success of your business. If you aren’t focused on ways to continuously improve retention rates, then you’re more likely to struggle in general, but especially if you face a major setback down the road.
Your employees and customers are equally important. They are the life force of your business, so if either isn’t having a good experience, it will lower your retention rates. And if your retention rates are low, you will struggle to turn a profit.
So if you want to boost your retention rates, keep your employees working hard and happy, and keep loyal customers coming back, you need to improve their experiences. Happy employees equal happy customers. So if you start by finding ways to improve the employee experience, it will have a positive effect on the customer experience as well.
4. Practice Sustainability
Customers today care more about supporting businesses that are eco-friendly, and it is likely that future generations of consumers will only continue to become even more eco-conscious. As such, it is crucial that finding ways to be more sustainable is part of your future-proofing plan.
Building a business that is more sustainable isn’t just about appealing to customers, though. In the long run, sustainable businesses can also save money and energy by being more conscious about things like the materials they use and the processes they follow that consume energy.
We might even see a day when the government starts enforcing more sustainability regulations on businesses. So it’s better to start preparing now rather than having to scramble to make quick adjustments last minute in the future.
5. Utilize Strategic Marketing
Smarter marketing tactics are a great way to future-proof your small business and ensure success for years to come. While many small businesses skimp on their marketing budget initially in an effort to save money, it’s not a wise move.
Marketing is how people find your business. It’s how you engage with consumers and keep them coming back for more. But it doesn’t have to be expensive. There are ways to develop a marketing strategy that doesn’t break the bank.
It’s especially important to have an affordable marketing plan for those times when money is tight, like during a recession. When people aren’t spending as much money, you need to get their attention even more if you want them to still choose to spend their money on your products or services.
There are numerous tools out there that enable small business owners to handle some of their own marketing digitally without having to hire someone else to do it for them. So even if you don’t have the budget for an entire marketing team or to outsource your marketing, you can still do a lot of things yourself.
6. Learn From the Past and Predict the Future
We might not have the actual power to predict the future yet, but we do have analytics, and that’s pretty close.
Data tools can be incredibly helpful for small businesses, as they can help you keep track of your business performance, which enables you to look back on the past and see where you might need to make some changes to improve going forward. But data can also give you insights into trends that can help you make predictions about the future of your industry.
And learning from past mistakes while also being able to prepare for trends that might come in the future is another excellent way to future-proof your small business. With the right data analytics tools, you can keep your eye on the past, the present, and the future, so you are fully prepared for anything at all times.
Future-proofing strategies can be unique to each business. There is no one right way to go about it. But hopefully, the strategies above can help give you an idea of how to get started.
You never know what could happen in today’s climate, as things are always changing fast, so it’s always best to be as prepared as possible to ensure your small business can sustain itself no matter what happens.