Four Best Business Practices to Take Control of What Is Ahead

For many businesses, the landscape has begun to settle to some degree, but we are still in the midst of great uncertainty economically, medically and politically. There are always positive steps that can be taken and here are a few often overlooked best practices to help navigate choppy seas.

1. Explore the What Ifs

There are few weapons in a leader’s arsenal more powerful than the right questions. If you study the best chess players, they have already thought out their next move before an opponent makes one — not because they can see into the future, but because they have thought about their action based on the various moves the opponent could make. This skill is never more vital than in times of uncertainty.

The specific “what if” questions are unique to each business, but looking at scenarios — for example, margins decreasing to move inventory faster, pricing changes due to shifts in the supply chain to other vendors, or receivables slowing down because customers may not be able to pay in as timely a manner — is very wise. Understanding what this could look like and the potential impact on the business will give confidence to direction today and also allow for proactive responses when changes in the business do occur.

2. Preserve Cash

The intentional management of cash is critical in uncertainty. Companies should plan to keep more cash on hand in reserve than they did pre-disruption. Take stock now — is there cash tied up in inventory or accounts receivable that could be freed up with some proactive steps? On the flip side, is there a big outflow coming up such as an insurance renewal or equipment investment that has to be made and planned for?

A best practice is to have a 13-week cash flow forecast — the goal is direction, not perfection. Visibility into where cash is going before it leaves the building is key. Cash will not only allow the company to manage through other bumps in the road, but also be the fuel to invest in new initiatives, opportunities and pivots that could create growth opportunities next year and beyond.

3. Know Thy Customer – Today and Tomorrow

Customers are not only a source of revenue, but a key source of information for planning. Talk to them regularly. Their financial health can determine how much they buy and how quickly they can pay. The customer’s own future outlook is very meaningful — are they optimistic and planning to grow, leading to revenue growth, or are they pessimistic, suggesting future orders may not come back as quickly? What are they buying? Has the mix changed? Are they seeking lower-dollar items, or are they restocking inventory to healthy levels?

And what about a competitor’s customers? Disruption is an opportunity to serve customers that may not be getting service elsewhere. Through this pandemic disruption, nimble businesses have won customers from competitors 10 and 20 times their size.

4. Use What You Have in Front of You

Disruption is an opportunity to maximize the resources already at your disposal. Take stock of all available resources. First, your team — both internal and external — can be a great source of information and market intel, not to mention business opportunities. What is your sales team seeing? Talk to your bank, CPA, outside legal and other third-party partners. They can be a wealth of information to help in planning and seizing opportunities; they are likely working with companies like yours and your vendors and customers.

Think in terms of capacity, as well. Do you have idle equipment or inventory that might allow the company to generate additional cash at a critical time, even if at a lower margin? Could the sales team use this as an opportunity to offer new customer strategies or even different product offerings?

It is also a great time to plan, refine, and be primed to strike. Maybe the customer market isn’t ready to buy, but the internal team could use the time to refine the numbers, presentation and tactical plan for when that time comes. Odds are, the company’s resources are not all at 100% use — that is a readily available lever to pull, but often forgotten.

Take advantage of these best practices; the competition may already be ahead of you. Disruption creates opportunity. Seize it.

Ryan Weissmueller is the founder and president of Fintrepid Solutions. Leveraging his two decades in finance and operational management, he is a third-generation entrepreneur and Arizona native. Headquartered in Scottsdale, Ariz., Ryan and the Fintrepid team have supported more than 80 entrepreneurial businesses in navigating challenges as they evolve over time, ensuring its clients are more profitable, more sustainable and more valuable.