Friday 26th of June 2015
The year 2020 brought an unexpected twist of turns and caught business owners unaware. They had l
...ittle time to salvage their entities, and many had...
The year 2020 brought an unexpected twist of turns and caught business owners unaware. They had little time to salvage their entities, and many had to rely on government grants to sustain themselves. It was an unprecedented situation that led to financial distress. Thus, business owners need to make their companies future-proof and prepare plans to keep going through unexpected circumstances like natural disasters and pandemics.
If you are planning to purchase a business for sale in South Africa, you should ensure that you prepare for the unexpected. Planning makes it easy to navigate through the choppy waters and stay calm through the shift. Here is how it can be achieved with ease.
Most business owners work on expanding their ventures and introducing new product ranges or entering new markets for growth. It is needed to improve profits and reduce the dependency on just one product or location. So, entrepreneurs need to diversify within their domain when they have the resources to create a growing customer base and an array of products.
If one of the products fails or customers in one category move to another brand, you will still have income coming from other categories and products to stay afloat. It aids in making the business more secure and reduces the risk of failure.
A business can face several threats due to changing climate, such as droughts, floods, hurricanes, wildfires, earthquakes, etc. The digital age has created newer dangers, including online scams, phishing, hacking, ransomware, intellectual property theft, etc. Some internal risks include frauds, embezzlements, lawsuits with customers or suppliers, etc. A health crisis like the COVID-19 pandemic can be added to this list as well.
Although business owners get insurance to cover the damage and loss caused by these risk factors, they do not ensure the sustainability of the business. It is vital to recovering from these setbacks and the insurance cover is not enough. Thus, identifying the risks will help in assessing the amount of restoration and funding required for each challenge.
Once you have identified all the problems that can affect your business, you will know how much surplus capital will be needed to continue working. The business owner needs to save every extra dollar to build a cash reserve that can provide relief during a rough patch and sustain the business. It should have funds to run the business for up to six months without making any income. It ensures that the entity does not have to shut down.
Thus, entrepreneurs should emphasise on cost-cutting, robust invoicing, paying off debts quickly, and increasing profits. Your accountant can help you in managing finances and maintaining a positive cash flow that will aid in building a cash reserve.
A business continuity plan is a roadmap that guides the employees in a crisis. It lays down the actions that need to be taken to safeguard the company in a variety of situations. It must have details about the way communication with clients will be handled, how the employees will work and get paid, how the cash reserve will be used and how the business will be brought back on track.
It will help the business to take preemptive measures and have a contingency plan in place in case of an unforeseen calamity. The plan must be communicated to the employees, and they must have a copy with them along with other important documents. A significant part of business continuity is safeguarding the confidential data of customers, employees, financial information and business processes. Thus, you must have a backup in the cloud to ensure that the data is not lost.
Your employees are your biggest strength in times of crisis. Make them ready for any eventuality by training them in first aid, fire drill, disaster management, remote working, etc. They should be guided to maintain a positive and calm mind in the harshest of situations, which will allow them to prove helpful. Well-trained staff members will respond quickly to any situation without panicking and find solutions.
Thus, develop your staff into a problem-solving team rather than stressing and fussing over the issue. It requires creating a work culture that promotes training, development and positivity of the employees.
Technology has proven to be the best way to safeguard employees and production during the pandemic. Also, it is essential for any business to keep moving to the next level of productivity. It can be easily achieved through the adoption of the latest technology. Advancements like software and machine learning aid in automating processes and reducing the risk of manual error.
Using modern tools like accounting software, payroll software, and inventory management software increase accuracy and efficiency. It makes time-consuming processes like data entry redundant and offers flexibility to employees to improve their output. Also, it reduces dependency on the staff and makes the business self-reliant. These tools can come in handy in situations where the staff is unable to operate.
The future is online, and you cannot keep pushing it away thinking that you do not need it. Going digital is imperative in the current world where businesses survived because of online ordering and e-commerce shops. Thus, you need to build a digital set-up where you can procure supplies online as well as sell your products to customers through your e-commerce website.
Retail businesses must use POS systems for in-store selling and encourage their buyers to buy online by offering incentives. It can increase their profit share and reduce spending on opening new stores and hiring more staff. In addition, step up your digital marketing efforts to keep promoting your business even during a financial crunch. So, start building social media presence and online visibility through an updated website, blog, search engine optimisation, become a part of online business directories and more.
Conclusion
Problems are a part of running the business. Thus, entrepreneurs planning to purchase a business for sale in South Africa must prepare for them in advance to remain unscathed.
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