Building a Resilient Business for the Next Global Crisis

Predicting the exact timing of another global crisis is nearly impossible. However, the pandemic taught us a lesson about the significant impact a crisis can have on businesses and its unpredictable nature. While we may not know what will trigger a global crisis—whether it be another health emergency or economic instability—major disruptions can affect businesses across any industry, making it essential to build a strong, resilient business.

What does it mean to have a resilient business? For some, it may mean having the confidence and agility needed to respond quickly to challenges, maintaining operations during uncertain times, supporting a strong team, and navigating unexpected obstacles your business may encounter.

For small business owners, resilience is particularly important, especially since small businesses were especially challenged during the pandemic. Although creating a strategy to build a resilient business can take time, it can be crucial.

Which areas of your business should you focus on to help build resiliency? In this article, we look at:

• Cash reserves
• Extra revenue streams
• Digital offerings
• A business continuity plan
• Prioritizing team members

Build a cash reserve

Your finances can be significantly impacted by a crisis. Building a resilient business can start with creating a strong financial foundation with a backup fund that you can access to supplement any loss of wages or decreased profit during a crisis.

If your budget is tight as it is, it may be difficult to find areas to save, especially if you need to put much of your profit back into your business. However, having a cushion in the form of a cash reserve can be extremely helpful whether you’re facing a crisis or not, especially if you ever face price hikes, dips in customer engagements, and more.

A cash reserve is the liquid capital on hand that you can access quickly. How many months of expenses should you save in a cash reserve? It’s entirely up to you and what makes the most sense for your business. However, three to six months is typically recommended, as you want to be able to cover rent, utilities, payroll, supplies, etc.

When building a cash reserve, remember that it may mean setting aside part of your earnings until you can build your reserve up to where you need it to be within a sensible amount of time. You won’t know when a global crisis will occur, so your cash reserve timeline shouldn’t be too long. Additionally, keep your reserve in a separate account so you’re less inclined to use it until you really need it, and consider allowing automatic transfers to that account to maintain consistency.

Some of the ways you can build a cash reserve is by reducing unnecessary costs that you can direct to your reserve, such as:

• Optimizing inventory orders, such as through demand forecasting, to avoid ordering excess
• Finding lower-cost suppliers or renegotiating vendor contracts
• Implementing sustainable practices like switching to LED lighting in your store (found to use 75% less energy compared to incandescent lighting) to help lower energy bills
• Stopping software subscriptions that you don’t use and taking advantage of free tools

READ MORE: 5 Ways to Cut Costs During Your Small Business’ Slow Season

Diversify your revenue streams

The saying, “don’t put all your eggs in one basket,” can be especially relevant for small businesses when it comes to generating revenue. If you rely on a single product or service, you risk being negatively affected by global crises that impacts specific markets, how consumers access your business, or economic factors disrupting inventory or material purchasing.

Diversifying your revenue stream can help you maintain profitability even if one area slows down. Applying this approach can allow you to expand your audience and cater to customers with varying needs. If you’re considering diversifying your product/service line, here are some ideas you can try:

• Offer complementary items: Consider selling products or services that complement your existing offerings. For example, a local coffee shop might sell branded merchandise, while a florist could offer floral arrangement workshops or items like vases or greeting cards.
• Create digital products: You could develop digital tools or downloadable products that customers can purchase from you. For instance, a jewelry shop owner can create an e-book with tutorials, or a photographer could enhance customer photo editing by selling presets
• Host workshops or virtual consulting: Can you branch off from your business and offer opportunities to engage with customers related to your industry? For example, a local restaurant owner could teach online cooking classes.
• Collaborate with other businesses: Look for opportunities to collaborate by either developing a new product you can promote or creating a bundled package that combines your services with another business.
• Run a subscription service: Subscriptions can be an excellent way to promote recurring revenue and can allow you to obtain regular upfront payments from customers who pay a subscription fee.

READ MORE: Should Your Small Business Consider Running a Subscription Service?

By diversifying, you can better ride any disruptive waves that could impact your business and improve your business’s overall resilience as a result.

Enhance digital offerings

The pandemic demonstrated just how beneficial technology can be in many areas of our lives, especially for businesses relying on software for online ordering, curbside pick-up, and more. In 2021, 91% of Canadian small and medium-sized enterprises invested in technology, and since 2020, 64% of small business owners made digital adaptations in efforts to support their business, with 42% crediting their business growth during the pandemic to their e-commerce presence.

If your website needs improvement or you haven’t explored digital solutions that could enhance the customer experience, such as online service bookings or pre-ordering, now can be the time to do so. You never know when you may need to rely solely on technology to engage with customers or process your purchases, and you’ll be glad to have a working infrastructure in place beforehand.

If you’re considering enhancing your website, consider:

• Optimizing your site for mobile devices, as many users access the internet via their phones
• Improving your search engine optimization (SEO) by using strategic keywords in your site content and alt text on images to make it easier for consumers to find you
• Adding e-commerce capabilities, if that applies to your small business
• Regularly checking and updating your contact details and hours of operation on both your website and Google business listing to ensure accuracy

Another way to build a resilient business is by focusing on your organic marketing efforts and how you engage with users on social media platforms. Organic marketing helps drive traffic to your digital properties, and improving your social media strategy can help you generate and connect with an interested audience.

READ MORE: Why is Organic Marketing Important for Small Businesses?

Creating an engaged community on social platforms through images and videos showcasing who you are and what you offer can strengthen customer relationships and enhance brand recognition. With 48% of consumers reporting that they interact with brands more often on social media than they did six months ago, now can be a great time to generate engaging content and build your presence online. That way, if a global crisis arises, you will have a direct line of communication with your customers and can share your next steps with a loyal audience.

Create a business continuity plan

A business continuity plan (BCP) is a pre-determined strategy designed to help businesses maintain operations during an unexpected threat, such as during a global crisis. It outlines the essential functions and operations necessary to keep a business running during disruptions to help minimize downtime.

A BCP will differ for each business and should be tailored to your specific business model, existing strategies, and the team members involved. Here are some of the steps involved:

1. Identify the critical business operations that must continue for your business to remain functional.
2. Determine how you will recover business operations in the event of a disruption.
3. Consider what risks could threaten your small business and the impact they could make. That way, you can develop specific plans to address each threat.
4. Determine who will help get things operational and factor in time for team training, if needed.
5. Be sure to test-run your BCP and adjust accordingly so it’s strong if the threat occurs.

One of the benefits of a BCP is that you can build up your defences ahead of time as you develop the steps to prepare. For example, if a cybersecurity threat could affect your business, you can implement strong safety measures such as regularly backing up data, adding multi-factor authentication, using strong passwords, etc. These proactive steps can enhance your confidence and help build a more resilient business.

Prioritize your team

No matter how big your team is, they are key players in building a resilient business. By prioritizing your team, you can create a strong, supported network to lean on and help make sure you’re working toward your business goals.

Ways you can support your team can be through:

• Regular, open communication through team check-ins (together and/or individually) to discuss feedback, catch up, etc.
• Enhancing employee well-being by creating a welcoming, inclusive work environment, embracing collaboration, providing recognition, and encouraging mental health and wellness resources
• Providing additional training and skill development, such as by preparing them to take on additional roles, which can be especially helpful in a global crisis where you need them to keep operations running

Small Business Solutions with The UPS Store

If you are looking for ways to enhance your small business, stop by The UPS Store, where we have a variety of services that can help your small business succeed. From printing to shipping to mailbox rentals and more, find a location near you to see how our team can help.