Every business has tough times. A key customer departs, costs go up unexpectedly, a new competitor comes into the market, or technology makes a previously successful product less relevant. The difference between the resilient businesses and the others is not that they don’t have these problems. It’s how good they are when they get there.
Resilience is often associated with having enough cash to weather a downturn. Financial strength does matter, but it’s more than just having cash in reserve. A strong, resilient business can pivot without losing sight of what makes it valuable to customers.
So how do you make one?
Five practical strategies to build a resilient business
1. Know your weaknesses
It’s easy to be confident when business is good. It’s also the best time to ask difficult questions. Consider:
- What if your biggest customer walked out today?
- Can you cope with a sudden increase in supplier costs?
- What if customers would buy differently?
These questions aren’t about expecting disaster. They help highlight where the resilient business has become too dependent on a single customer, supplier, product, market, or source of revenue. Once those weaknesses are exposed, they are a lot easier to correct.
2. Ensure your business model is adaptable
Sometimes resilience is more than finding efficiencies or cutting costs. The company’s business model may also have to evolve. Customer expectations are changing, new technology is driving alternative ways of delivering services, and established pricing models can be challenged quickly by competitors. When companies are too married to the model that made them successful, they have trouble reacting.
For companies looking for more radical change, business model innovation services from Cognosis show how new ways of creating, delivering, and capturing value can open up new opportunities. Your goal is not to re-invent your company every time the market changes. It’s about not becoming so dependent on one way of operating that change becomes almost impossible.
3. Keep some financial wiggle room
If every dollar is already earmarked, it’s a lot harder to be resilient. Healthy cash reserves present options for leaders. They can deal with an unforeseen expense, invest in a downturn, or take the time to make a considered decision rather than react to immediate financial pressure. Businesses need to understand where their profits actually come from, too. A high revenue product is not necessarily a high profit product. A big customer may be less valuable when the total cost of serving him is taken into account. Understanding these numbers helps to determine what needs to be protected when conditions get tough.
4. Be close to customers
Normally, the first sign a market is changing comes from the customers. Their questions and complaints, their buying patterns, and requests can show emerging needs long before they show up in a formal industry report. So businesses that have real conversations with customers are better positioned to adapt early. This does not mean that you have to act on every suggestion. It means listening closely enough to hear when several small signals are pointing to a larger change.
5. Allow space for response
Teams that wait for every decision to come from the top will be less responsive to problems than workers who know the priorities of their company. With clarity of responsibility, openness of communication, and willingness to challenge the status quo, an organization can respond faster. Leaders need to make it safe for employees to say when something is no longer working. The problems become far more dangerous when employees feel they have to hide them.
