Built To Bounce: A Resilient Business
Businesses that have developed thick skin may sometimes get knocked down but never knocked out. This is resilience — the capacity not only to withstand adversity but gain against it.
Not to fete the pandemic, but that tough stretch did lift the lid on what a resilient business should look like, albeit with many casualties. Thus, today’s executives and business owners can no longer pay lip service to building resilience, lest their companies become sad statistics.
Given the current unpredictable and intertwined global business environment with more third-party risks to consider, you would be hanging on a thread without a resilience-building plan. Fortunately, with proper intent and strategy, creating a resilient business is achievable.
Here’s how to build a more resilient company.
Spread and Manage Your Operational Risks
When there’s a cloud of uncertainty hanging over an industry, business operations take the first hit. A good example was during the COVID lockdowns where some states like California required the closure of non-essential businesses while others like South Dakota were more lenient.
If all your operations were centralized in one location, say California, you would have suffered greatly from the lockdown procedures in that state. But if you had decentralized operations in several states, like South Dakota and Arkansas, you would have maintained a good operational balance during the lockdowns. This is what spreading operational risks entails.
Additionally, decentralizing operations shields you from major losses caused by acts of nature like hurricanes or floods. When you’re running multiple operational centers and one is immobilized, you can scale capacity in other outlets to bridge that gap. Decentralizing functions is akin to hedging your operations against unpredictable situational risks.
Create Multiple Revenue Streams
According to U.S. Bureau of Labor Statistics data, close to 20% of new businesses fail within the first two years of operations and 50% in their fifth year. Lack of sufficient cash flow to sustain operations is one of the main reasons why new businesses go belly up. To achieve long-term sustainability, you should diversify your cash flow at the earliest opportunity.
While there are many paths to diversify your cash flow, offering multiple products and services is more attainable, especially for young businesses. When a crisis hits your company or industry, a healthy cash reserve affords you some wiggle room to ideate solutions without fear of cash crunches.
Autonomize Critical Systems
If you break down the operations of your company in phases, you’ll find many different elements that make the whole system work. Because of their interdependence, the entire system fails to work if one part malfunctions. For instance, if your human resource software fails, your finance staff may not process payroll in time.
The more sustainable business practice is to autonomize your company’s main systems. This way, a failure in one cog will not paralyze the entire wheel. Even though this comes with some setbacks like creating data silos, you can leverage technology to fill such gaps.
In the long end, you’ll enjoy more mobility and agility when faced with a crisis because you can isolate issues and apply solutions more rapidly.
Test Run Threat Scenarios in a Sandbox Environment
Save for unique crises like the past pandemic, you can predict or deduce from historical data or future projections the issues likely to plague your business. What better way to counteract such issues than witness their impacts first-hand in a test environment? Experimentation will give you a real taste of how hard certain setbacks can hit your company’s system.
This is especially true with cyberattacks. You may consider hiring ethical hackers to hackproof your computer system and sensitize your employees about following cyber best practices. Doing so helps you spot and correct system vulnerabilities and loopholes upon which potential hackers could otherwise capitalize.
Fortify Your Contingency Plans On the Go
Given the dynamic and fast-changing nature of the modern business world, challenges may take different faces. Today, you may be dealing with a supply chain issue, and the next day a social issue. This means you must constantly update your contingency measures to address new issues as they develop. Doing so keeps you on top of challenges and helps you adapt solutions more easily with less downtime.
Align Your Company Philosophy With Your Business Ecosystem
Doing global business involves many points of contact from your suppliers, vendors, and international customers with different social and cultural backgrounds. You must manage all these relationships simultaneously with special care not to interfere with their values or invite unnecessary resistance.
Having a profound knowledge of all your third parties helps you better understand their work processes and strengthen your working relationships. From this position, you can tell when things are getting out of hand on their side, and rewire your processes accordingly.
Say you have a supplier from China who always updates your product catalog on time. However, you notice inconsistencies in updates for a select period of time. It could mean your supplier is running into supply logjams or other in-house issues like inadequate staffing.
When you have a strong working relationship with the other players in your business ecosystem, they’ll be willing to share the challenges they’re experiencing in their operations. In cases where they don’t share directly, you can pick up issues from their mannerisms. You then leverage this data to plan ahead and avoid heavy hits in case one of your third parties fails to deliver.
Talk to a Business Consultant Like Ghost Mountain
The actual process of building a resilient business is not as easy as you may envision. Your resilience-building strategy must be informed by reliable and verifiable business data and insights, lest you make off-the-cuff decisions. You also need to collaborate with your industry’s stakeholders to establish how changes in their processes can affect your company’s operations.
Certainly, creating a resilient business takes more than having a forward-thinking attitude and a relentless spirit. If you’re not guided by past data and well-researched forecasts, crises may bring your business down regardless of your positive outlook. That‘s why consulting with an experienced partner like Ghost Mountain can save your day.
At Ghost Mountain, we have the capacity to research your industry in-depth and recommend the best sustainability practices to keep your business above adversities, be they recessions, staffing shortages, or supply chain issues.
Contact us today and let’s talk strategy.