Is it possible to future proof your business?

In today’s blog, we explore the concept of future-proofing your business. And answer the question: can you ensure your business will thrive regardless of what the future holds?

We will discuss strategies to mitigate risks and increase your chances of long-term success, beyond just 5 or 10 years. Then finish off with how you can prepare for potential challenges and uncertainties.

I’ll share actionable strategies to help you develop a comprehensive plan of action. As the leader of your business, it’s your responsibility to think about the future and protect your business from whatever comes your way.

Now, let’s address today’s question: can you truly future-proof your business? The answer is no, it’s not possible to do so 100%.

However, very little in life is guaranteed 100%. Your business success today is not guaranteed 100%. There will always be a margin of error.

But that doesn’t mean we should give up. It means we must prepare and mitigate potential risks. We must do everything we can to improve our chances of success in the future by taking action now.

This became particularly front and centre during the COVID-19 pandemic. Many businesses had to shut down, pivot, change, or even move industries to stay afloat. It wasn’t just the pandemic that businesses had to deal with; it was also the impact of innovation during this time that has changed consumer behaviours into the future.

There are two main components when looking at how you can future proof your business: short-term planning and long-term planning. When we refer to short-term planning, we’re talking about the next five to ten years. Long-term, we’re talking about 10, 20, 30, 50, or even 100 years.

Certain decisions and choices you make when creating and running your business will significantly impact your future success beyond 10 years. One key factor is the industry you’re in and the market you operate.

Many people don’t discuss this, but the level of your success is often greatly influenced by the market you’re in. Some markets are well-established, catering to basic human needs and wants that have been sought after throughout history. These include healthcare, education, security, entertainment, and consumables. People need to eat and drink.

That’s why many people think it’s easy to start a restaurant as their first business. After all, everyone needs to eat, right? However, with stability or high demand comes high competition. That’s why you often hear advice to find an in-demand market within these industries, but to focus on a specific niche to avoid competition from giants.

A good example is Gym Shark.

Clothing is a basic need, and fashion is a part of our lifestyle. However, Gym Shark focused on a specific type of clothing: athletic wear. They even niched down further, focusing on high-quality athletic wear.

Gym Shark is a brand that can foreseeably be around for 100 years. They’ve created a niche that sets them apart from the competition and allows them to thrive in a market that continues to evolve.

Yes, they’ll face challenges, markets will change, and even fashion trends will shift, but they can adapt to these changes. By narrowing their focus, they’ve become a well-known brand in their niche.

This is an excellent way to future-proof your business. By creating a product that’s in demand and by narrowing your focus, you can ensure your business’s longevity.

Let’s discuss short-term planning to future-proof your business. One simple yet effective strategy we employ in our business is creating a “what-if” document. In this document, we list various potential scenarios.

We should ask ourselves, “What if this happens?”, documenting all our concerns, threats, and potential risks. For instance, we consider what if a competitor copies our features, the market shifts, or what if, what if, what if?

The purpose of this “what-if” list isn’t to cause anxiety; it’s a tool to document all possible outcomes, providing a clear record of what could happen. We then order these scenarios in order of urgency, identifying those most likely to occur in the near future.

During your business meetings, actively discuss and address each “what-if” scenario, brainstorm potential solutions and identifying actions to mitigate these potential risks. While some solutions may require time, such as three years, we start taking steps today to ensure these risks don’t escalate into problems in the future.

We also revisit this “what-if” list regularly (best to do this twice a year) because some scenarios may become irrelevant over time and new ones could service as your business changes. For example, if the market we’re in becomes a fad, it may no longer be a trend after two years. However, if we’ve identified a new habit or behaviour in the marketplace, we can continue to focus on addressing those risks.

This is incredibly helpful in creating and drafting contingency plans, regardless of what you think may or may not happen. Another piece of advice I highly recommend is the financial risk of the future. I’m not a financial advisor, but in my experience, it’s often helpful to take money off the table from your business. Too many businesses reinvest all their money back in their business.

This is fine when you’re starting out in your first few years, but once you begin growing, you need to establish some sort of safety net for unexpected circumstances. This could cover salaries, damaged goods, or equipment essential for producing your product. You never know what might happen – your office could be damaged due to flooding, and aren’t always covered by insurance.

The key to financial stability is having cash reserves. Why does Apple have billions in the bank? Many people wonder, “Why does Apple have all that money in the bank?”

Inflation is crazy, and banks aren’t making any money off it. In fact, managing billions in the bank costs money.

Banks charge for managing large amounts of money because cash reserves are crucial for hedging bets. You may not have billions, but £40,000, £50,000, £60,000, or £100,000 is a good amount of runway in your business.

Having four, five, or six months of payroll and operational costs in your bank account is incredibly helpful when something like a pandemic or financial crisis hits. Many people think they’ll just borrow money, but sometimes that’s not an option.

So, having a buffer is actually quite beneficial. Determine your number and then reinvest the rest or invest it otherwise. It’s up to you.

Saving for a rainy day is solid advice and will help your business survive or even pivot when the time comes.

It’s impossible to guarantee your business will survive whatever comes your way in the future, however, you can mitigate risks and prepare for them.

By ensuring you’re not completely blindsided, you’ll sleep better at night and feel ready for whatever the world throws your way as you run and build your business.

I can make sure my team and I are protected, and at the very least, I will feel content that I’ve done everything I can to protect the future of my business.

The first step I recommend to all of our clients, is to start writing your “what-if” list. Do this away from your office or desk, do this in a quiet room or do it on a walk. Getting out of your environment and thinking outside the box can lead to new ideas. Sometimes, stepping outside your comfort zone is key.

That covers everything for today.

Got a burning question? Reach out on our social channels or email me at michael@purpleyak.co.uk

Thank you so much for reading.

Take care.