You can’t predict the future, but you can prepare your business for upcoming challenges. One way is to take steps to future proof your business, and another is to plan for succession. Here, we’ll provide advice on both. These are complex topics and we can only scratch the surface here. Contact a Vault team member to discuss this further and start planning for the unexpected.
Tips For Future Proofing Your Business
Don’t Depend On One Part Of Your Business
Most companies get started with one great product. But if this product generates almost all your revenue, you should diversify your product portfolio and reduce your dependence on one product. Develop more revenue streams to increase your business’s chances of survival.
Create New Strategies To Get New Customers
‘What got you here won’t take you there.’ This means that the strategies you used to attract your current customers might not attract new customers in future. If you don’t evolve and continually create new strategies, your business will decline and die.
Predict Future Demands Today
When Henry Ford made cheap, reliable cars, people said, ‘Nah, what’s wrong with a horse?’ Sometimes you have to anticipate what your customers want. This requires imagination, experience and a real understanding of the problems your customers face.
Identify And Manage Risks
To truly future proof your business, you must identify potential risks. You may be unaware of current risks in areas like people, customer service, product quality, systems and business processes, legal compliance and data security. Track down those risks and find solutions before they bring down your business.
Listen To And Observe Your Customers
Start looking for small changes in customer behavior that might indicate a big shift is coming. For example, online shopping has permanently changed how people shop. Businesses that saw this coming created an online option along with their physical store. Ask your customers for feedback, listen to their needs and adapt as necessary.
Follow Industry Trends In Other Countries
Keep an eye on your industry’s development in other countries. Read related blogs, attend online industry events and create Google Alerts to stay up to date.
Watch For Developments In Other Industries
Also keep up with developments outside your industry that could affect yours. Kodak was a huge company that didn’t understand the potential effect of smartphones until it was too late. Watch out for influencing factors that could indirectly or unexpectedly affect your business.
In business, you must innovate to stay ahead of the game. So create an environment that promotes and fosters an innovation culture. Give your employees the freedom to try new things, send them to inspiring events and reward them for their work.
To truly future proof your business, you need plans and procedures in place to ensure its survival and financial stability if senior staff, directors or owners become unable to work, pass away or just leave the company. Business succession planning will provide more certainty no matter what lies ahead. At Vault, our business advisory experts can help you develop the right succession plan for your particular business. For now, here are some tips to get you thinking.
The Succession Plan For Your Structure
Each business’s succession plan is unique. Your ideal succession plan will depend on your legal structure – e.g. sole trader, partnership, company – and internal management.
- An incorporated business has perpetual succession, as the company survives as its own legal entity after a director dies, and retains its assets and contracts when sold.
- A partnership or sole trader business may need one person’s obligations assigned to another if the owner leaves.
What To Include In A Succession Plan
You need a detailed business succession plan to effectively transfer your business to your successor. Here are some things to consider:
- The successor: This person needs to be highly qualified with experience, skills, knowledge, passion and drive. If your desired person isn’t quite ready yet, consider suitable training for them in the near future.
- Finances: To create the plan, you must understand the numbers and know the value of the business. What tax obligations will apply in its transition? What financial opportunities can the business go after while transitioning? How will you minimise financial risks?
- Timeframe: When will transitions occur and over what period?
- Job description: What will the new successor’s tasks and responsibilities be? Will business structures or hierarchies change? Will roles or processes need redefining?
Want Expert Help?
Obviously future proofing and succession planning are tricky areas of business as they require legal, taxation, finance and other expertise to get it right. Don’t risk everything you’ve worked so hard for.
Contact Vault’s business advisory team to ensure your business is still kicking goals long into the future.