6 Ways to Build Business Resilience
Play to your strengths to run a lean company.
Many of us are familiar with post-traumatic stress disorder, but are you aware of post-traumatic growth? Psychologists such as Martin Seligman have highlighted that, indeed, what doesn’t kill us often does make us stronger.
The good news is that you don’t have to wait for the next stumbling block to start building up resilience in your business. Put the energy you spend worrying about issues like tariffs, potential downturns and market turbulence toward something more productive with these six ideas.
- Have your safety net in place. Whether it’s a line of credit or an emergency fund, access to liquidity will allow you to take advantage of any opportunities. “I have always believed that the only way to cope with a cash crisis is not to contract but to expand out of it,” Virgin Atlantic founder Richard Branson wrote.
- Lock in favorable supply pricing with contracts. If you’re able to fork over the cash to lock in the prices of materials, this might be the right strategy for you amid tariffs and trade uncertainty.
- Diversify where you can. One North Carolina bicycle manufacturer was forced to hike prices by as much as $425 due to tariffs, The Wall Street Journal reported. In this situation, a firm might decide to expand into related services with higher profit margins, such as bike repair and maintenance, to diversify and offset razor-thin profit margins elsewhere.
- Strengthen ties with existing customers and vendors. This is where you show how grateful you are for what you have. For example, you can over-deliver on your promises, the way firms like Zappos do with shipping estimates, or offer a special deal to your best customers.
- Trade fixed costs for variable ones. There are many ways to do this, such as outsourcing to a contractor to help you reduce overhead and increase flexibility. Get creative and you may find new ways to run lean.
- Stress-test your business. Your advisor can model hypothetical scenarios using financial planning software that gives you an idea of where you stand and what your business can endure with confidence.
If you take some of these steps now, when you’re not under pressure, you might be able to navigate challenges nimbly, while your competition lags behind. You might have to try various options to find what works best for your business, but coming out stronger on the other side makes it all worth it.
Sources: Entrepreneur magazine, Losing My Virginity by Richard Branson, The Wall Street Journal