Like a bad movie or an embarrassing gaff, 2020 is one of those things we’d rather forget, put it behind us, and move on. Not so quick. Like the Kelly Clarkson song says, “what doesn’t kill you makes you stronger” and there are plenty of lessons from 2020 that apply to mid-sized businesses every year. Some of these are actually easier or more important to pay attention to in good years.
1. Establish a cash reserve
Companies with a solid cash reserve on hand when restrictions began and different parts of the economy reacted had two advantages — time and confidence. They didn’t have to make hasty, short-term decisions such as shedding talent or scaling back operations. They had the resources for investments in shifting to work-from-home or retrofitting their business for safety. They were able to weigh their options, evaluate scenarios and make informed decisions with the confidence that comes with having a rainy-day fund.
2. Maintain access to back-up funding especially if you don’t need it.
In addition to a cash reserve, maintaining a line of credit provides additional flexibility. The time to put this in place is before you need it and even if you have strong cash reserves and don’t anticipate needing it.
3. Diversify your revenue streams.
Most mid-size businesses have a tension between focusing on one highly profitable niche versus spreading their focus over multiple products or markets. In normal times, we see diversification of services, markets or products, as a key strategy for growth. In 2020, diversification was a strategy for survival. For businesses that successfully diversified, it’s time to look at how this affects your strategy for building your business value for the future.
4. Invest in relationships.
Cash may be king, but relationships are like gold. Strong client relationships, good business partnerships, and a good network were the intangibles that business leaders relied on in the toughest times in 2020. Current clients provided stability or at least some baseline of revenue, even if new business dried up. Strategic partners helped solve issues ranging from supply chain challenges to creating safe work environments. And that network built from years of events, introductions and favors offered new connections, inspiration and reassurance.
5. Invest when others won’t or can’t.
As already mentioned, cash reserves are important, but it’s also important to keep investing. It’s easy to invest in new technology or equipment or talent when things are going well and the economy is booming. But the best time to do it is often when circumstances are more challenging. Remember, the iPhone was launched in the last great recession. What investments should you make now that will change your world in the future?
6. Plan for disruption.
Having a basic business continuity plan, including succession planning, provides a starting point for any business disruption. If you’ve considered what steps to take if your normal business location isn’t available, migrating to work-from-anywhere is more feasible. If you plan for redundancy in key positions as part of succession planning, your business is less vulnerable. Plus thinking about ways your business could be disrupted can often lead to new ideas for improvements.
7. Get good at working with your financial models.
Many small and mid-sized businesses run very successfully for years without detailed financial forecasts and reporting systems. But being armed with detailed forecasts and reporting allows an executive to not only look in the rear-view mirror, but also to consider what if scenarios for the future and better manage expenses as well as know where to invest for growth.
8. Create a sustainable growth engine.
“We don’t really have to market. Our business just comes to us.” This is a great place to be as a business, until growth plateaus or worse, until something external changes the dynamic. Knowing exactly how you can get new business, which levers to pull, what works and what doesn’t, gives you greater control over your destiny. It pays to invest in smart sales and marketing efforts that you track and refine over time.
9. Build trust in your brand.
If you have business coming to you, chances are you have the foundation for a great brand. But the thing about great brands is that they require care and feeding. That starts with your relationships with your most important constituents: your employees and your customers. It also requires you to be intentional about telling your story, before circumstances or competitors influence how your story is told.
10. Stay focused on your long-term vision.
Many businesses learned in 2020 that having a clear vision about their direction provided that true north that guided them as they made difficult decisions. That same guidance should drive every business decision – where to invest, who to hire, what customers to pursue.
You may have checked off all ten of these in 2020. Or perhaps the last year revealed some gaps in your business planning. In any case, it is vital to take the time to ensure your organization is taking the right measures to accomplish both your short-and long-term goals. Business consulting and strategic planning are specialties at Thinc Strategy. If you’d like to talk with one of our consultants, contact us today.