Clever ways to future-proof your business
While small businesses are often great at what they do, they're not so great at planning for the future, the executive director of small business customer unit at Telstra, Charles Agee says.
For someone who sees both sides of the fence, Agee says small businesses don't invest enough time or energy in making sure their technology supports optimum levels of productivity.
"There has been an explosion of small business systems and equipment in the past few years, meaning there's a switch for this and a router for that. But small businesses need to find a balance between the equipment they need on premises and what can be in the cloud," Agee says.
Here are some things a business should consider when grappling with the issue of future-proofing.
Change the way you think about technology
Businesses need to get their head among the clouds, says Object Consulting's national Microsoft practice manager, Kevin Francis.
"Cloud computing in general is the way of the future. There is a lot of talk about the cloud and it's all highly technical and I don't think a lot of small business owners understand it. But they need to because the cloud is the future and it will play an increasingly big role in everything," Francis says.
By moving to cloud computing, businesses are able to do away with on-site servers and PC storage, which is old hat, he says.
Smart solutions that don't rely on local storage is the future, he adds. "In five years' time everyone will be able to access anything from anywhere remotely, and this is where businesses need to be now."
Businesses should seek out a reputable global cloud provider, which has a number of benefits.
"The beauty of going with a reputable company is that their security and disaster recovery process will be far better than anything a small business is likely to have."
Businesses also need to grapple with the fact that the world is increasingly heading toward an app-driven society that relies on social media platforms.
"Businesses need to realise that times are changing now, and traditional websites no longer cut it. It's about designing apps, getting on Facebook and making sure your customers can buy from you online. This needs to be addressed now because while it's important today, it will be increasingly vital in the future."
Asking for exactly what your customers want from you takes courage, but it can make your business successful beyond its wildest dreams.
One of the best examples of a business encouraging open discussion on its offering comes from international coffee giant Starbucks, which threw open its brand for public scrutiny when it launched online platform MyStarbucksIdea in 2009, inviting anyone in the world to log on and make suggestions on what the brand could do better.
The social media experiment has brought together Starbucks aficionados in a way not seen before. To date, there are 25,710 ideas for new coffee and espresso drinks alone listed on the site, which remains live today.
The managing director of Sydney research and strategy firm The Leading Edge, Tim Riches, says while opening your business up to comment (and potentially criticism) can be a scary prospect for business owners, it can also give consumers a sense of ownership over your business and brand, which can only be a good thing. This approach also gives businesses endless ideas on how it can improve its offering.
"While Starbucks have done this on a grand scale, businesses can take the boldness displayed by Starbucks and do something similar, albeit on a smaller scale. Businesses fall by the wayside if they don't gather information on what customers want and act on it, Riches says.
It's about making sure that you remain relevant to customers into the future, he says.
Watch market forces
Very few businesses operate in isolation, which is why it's vital to watch market forces and react accordingly.
Other than keeping up with the news and reading industry publications, there are a number of reports and future trends publication you could subscribe to, including IBISWorld, which provides five-year forecasts for hundreds of sectors.
Riches says it's vital that businesses understand the ecosystem in which they operate and how that impacts on both their customers and their own business.
"If you make the best lasagne in town but nutritionists are telling people not to eat it, then it will have an impact on your business. Watching market forces and reacting to that is vital, because they present both threats and opportunities," he says.
Business owners also need to be open-minded and confident enough to lead their business into new territory as the market landscape changes, Riches says.
"Small businesses are extremely well placed to react to market forces because they can be nimble."
Change the way you think about marketing
Placing an ad in your industry magazine or making a radio ad probably won't cut it in the future. Business owners need to change the way they think about marketing and understand that traditional forms of advertising will be less important in the future.
Instead, consider how you can empower consumers to become advocates for your brand.
How to unlock the advocacy effect online is the key, Riches says.
"An online digital strategy and carefully considered social media page that injects high talk-ability among consumers is the quickest way to get consumers talking about your brand and to share what they know about your business with their friends, which is advocacy for your brand at its best. If you can get the social media formula right now and start building a relationship with your customers online, then the future will look rosy," Riches says.
Businesses need to make sure they're using social media to add value to people's lives via their status updates, says Brisbane social media trainer and speaker, Matt Adams.
"You need to position yourself as an expert in your field in your posts. To do that, post things like tips, industry info, testimonials, short-cuts, interesting news and ways to help customers solve problems. Be seen to be helping people by educating and informing them," Adams says.
And while a website is a great marketing tool, it needs to include links to social media channels. A good quality video on your site that talks visitors through your business philosophy or gives them a behind-the-scenes look at your business can also be a powerful addition.
Free up your cashflow
Most business owners will future-proof the business by only investing in property that has the space that allows your business to grow over the coming years.
But fewer consider whether their cashflow can accommodate growth. No matter how much cash you have in reserve, anything could happen in the future.
Changes to the economy, a new consumer trend or even a natural disaster could impact your business, so make sure you consider which cashflow strategies will protect your business in years to come. Make sure you ask both your accountant and financial institution for advice when it comes to cashflow.
Jason Fryer, head of small business services at American Express says almost half of Australia's small business owners regard money flow in and out of their business to be a major concern.
Small businesses can avoid cashflow shortages without putting personal finances at risk or delaying supplier payments by compiling a cashflow forecast, keeping original receipts and reconciling against bank and credit card statements on a regular basis, he says. Personal and business expenses should also be kept separate, Fryer says.
And business owners shouldn't extend credit if it doesn't have to and should also be vigilant with debtor management.
Seek regular advice from your accountant
While advice will differ depending on your business and its structure, there are a few things every small business should consider in a bid to future-proof their business, according to Sydney accounting firm Nexia Court & Co partner Sean Urquhart.
- Consider whether it's wise to transfer assets into a trust for protection purposes.
- A novated lease can be a good option for small businesses. This means that ownership of a company vehicles will be automatically transferred to the employee who uses it if they leave, meaning you won't be left with assets you didn't plan for.
- An insurance policy that will pay out if a key person in the business dies or is incapacitated can be a wise investment.
- There are a lot of government grants available, but it's up to businesses to uncover them. Consider hiring a specialist grants sleuth, who can do the research on grants that are applicable to your business.
- Many businesses wait for the taxman to knock at the door, which is a bad idea. Instead, lodge tax returns on time and be a good complier. This way, tax concessions are applicable to you. Don't bury your head in the sand when it comes to the Tax Office.
- Don't just visit your accountant once a year. Seek out an accountant that will give you advice that can help shape your business decisions throughout the year.