Copyright Entrepreneur
If you’re an entrepreneur today, one constant within today’s business environment is certainly change. It’s not just rising costs, supply chain disruptions, shifting consumer demand and commercial interest rates remaining stubbornly high. From there, you have a labor market that’s fluctuating so quickly and workers demanding higher salaries just to keep up with inflation — no wonder business owners feel all over the place, steering through a thick fog without a compass. All of this uncertainty doesn’t have to mean paralysis that causes anxiety and stress. History will repeat itself, again and again. In fact, volatile markets have historically created some of the greatest opportunities for entrepreneurs who have been willing to jump at the opportunity, but with clarity and purpose. However, today is a much different atmosphere, and the year ahead will provide opportunities for those who strengthen their financial foundations and adapt with nimble operational changes quickly, which provide new investment opportunities when others are retreating. Here are a few ways to turn today’s instability into strategy. Related: The Smart Entrepreneur’s Guide to Thriving in Uncertain Times Building financial resilience The old adage, “Cash is King,” is still true here. Entrepreneurs who understand this and find ways to survive turbulence while also keeping a keen eye on their numbers and finding ways to be flexible with their financing will thrive. Cash flow strategy must start with tightening it — accelerating receivables while keeping strong invoicing cadences, renegotiating with vendors on payment terms and monitoring burn rates proactively. With today’s fast-moving business world, technology has broadened the opportunities for alternative financing options. SBA 7(a) loans have a lengthy application process, but if you can survive that initial period, they have some of the most rewarding terms available. Revenue-based options and even customer prepayments are also options to entrepreneurs today, with more ways than ever to keep capital flowing without shelling out equity. The key here is planning; if you’re within six months of runway available, you shouldn’t be waiting until you’re desperate. Waiting until you’re desperate is when you lose leverage and leave too much on the table. Protecting margins through agility In trying times, many entrepreneurs try to survive by cutting costs and reducing headcount, but the more important and smarter approach is to protect the margins. Releasing your employees and cutting costs so drastically isn’t the most agile way to do so. Margins are critical. Diversifying your supply chain to avoid sudden shortages and locking in others with long-term contracts when pricing is favorable could mean a few basis points. Many companies have also taken advantage of economic downturns to adjust operations. Redesigning pricing models, developing new sales channels, bundling services and shifting to a subscription-based model all add opportunities for a more predictable revenue stream. The lesson here is simple: If you remain resilient and nimble, you’re in a better position to operate while withstanding external shocks. Enterprise organizations are often unable to make quick decisions; entrepreneurs who do adapt quickly historically come out of these trying times in a stronger competitive position. Related: Why a Downturn is the Perfect Time to Grow Lean into growth where others retreat Being an entrepreneur is a lot like being an investor — you boldly take advantage of downturns that show opportunities to play a good offense. As others pull back on their expenses within marketing and sales, your message should cut through the noise like a hot knife in butter. When highly qualified resources become available from corporate layoffs, you’re in a prime position to recruit skilled employees who may have previously been out of reach. Your biggest opportunities may come through relationship-building when customers feel anxious, encouraging them to stick with you and your offerings instead of drifting to cheaper options.
