With furlough ending on the 30th September 2021, a lot of pessimism has been portrayed about how the scheme finishing will likely pull the carpet from under businesses’ feet. Many economic analysts predict that a range of redundancies and insolvencies are likely to occur off the back of furlough ending, but there’s also a huge chance for business owners to really drill down what’s important and what they want from their business.
Many owners will probably say they want to make X amount of money but what is the reason behind why they want to make that money. What motivates you to succeed and what do you aim to achieve? Getting a solid, appropriate answer for this is likely to take a fair bit of time if it’s not already been formulated, however it is so vital for long term stability and sustainability.
Switching the perspective from turnover to profit is also something I’d recommend, after seeing so many businesses focus on turnover only to see profits not rising in alignment and therefore causing long-term issues. I remember a quote said to me a while ago which was ‘turnover is vanity, profit is sanity’ and there’s a huge element of truth in that. By focusing on profit, you consider all of your overheads, how much you’re putting into the business and whether or not it returns investment. This may sound rather obvious, but you’d be surprised how many business owners choose to avoid this. By cashflow forecasting and scenario planning, you’re not only safeguarding your business through planning and gaining a detailed grasp of your finances, but you’re also discovering the gaps in your business where you can generate future success.
As well as this, you need to gage the market and environment your business is in. If you look at the wider world, the pandemic has accelerated the digitalisation of many industries so this needs to be accommodated or you’re going to fall behind. What type of digital sales and digital marketing is needed to achieve growth in your business? There’s no point spending all your time and resources on a particular platform such as LinkedIn for example, but your target customers don’t necessarily use LinkedIn all that much.
Identifying the customer journey and how they’ll get to you is crucial, as with this knowledge you can build your brand or product to entice them appropriately. This then links into pricing and offering a multitude of options to attract the widest scale of audience. If you just charge a flat £100 fee for a service, you may be overpricing customers out whilst on the other hand a customer may want a premium or upgraded package and are willing to spend more for additional services. All of this can be done through research and communication with your consumers, whether that be through feedback forms or just picking up the phone and interacting with them personally.
Looking inwards into your business is also something which I can’t recommend enough. This just isn’t looking at finances or what technology you’re using, but documenting all of the efficiencies, systems and processes that you use in your business. Again, this could take a lot of time but by recording this and seeing how much you duplicate things or where things could be duplicated, you’re streamlining your business operations. This not only increase the chances of being more profitable but you’re only making the business more valuable from a shareholder perspective. When doing this, the question will arise whether team members offer enough value to be kept in the business. This can be tough and stressful, however it’s something that is fundamental as a business owner. Can certain roles effectively be automated or even outsourced for a reduced fee compared to a full-time salary? If, like thousands of businesses, you’re bringing people back from furlough it will need to be decided whether it’s beneficial to integrate these individuals back into the business or continue without them. If you choose to keep people because you’re sensitive to their personal situations or you don’t want to hurt their feelings by getting rid of them, you’re only holding them back by keeping them under false pretences. Getting to the core of these important questions and issues could be the difference between your business struggling or your business thriving.
Furthermore, as a business owner the accountability for your team lies with you. It’s up to you to be able to communicate clearly with your team, helping them to buy into the vision of the business whilst listening to their doubts and concerns. This is even more apparent during the post-COVID world we’re entering and with furlough ending, you will be needed to deal with these uncertainties in a compassionate and respectable manner.
Everything mentioned relates to mindset and being able to cultivate a healthy and progressive mindset which is so key to your leadership. You always need to be learning and looking for ways to improve. One of the best ways to achieve a healthy mindset is surround yourself with individuals who you can trust but also who will offer different opinions, sometimes conflicting, to yours. This provides a fresh perspective that if used logically, can take your business to the next level. Putting yourself outside of your comfort zone is paramount to success.
The likelihood is that most business owners will have already put the preparations in place to deal with these issues before the furlough deadline. If there are certain things still left unanswered however, you really need to weigh up these concerns in a rational yet calculated manner. We’re currently in the midst of probably the most certainty during the most uncertain 18 months we’re ever likely to face. There are huge opportunities for business owners to re-evaluate and reassess their business model, using the unpredictability to their advantage.
We hope this has outlined to you some of the concerns that business owners will be dealing with as the furlough scheme concludes on the 30th September 2021. If you require any further information on our advisory services, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.