The pandemic has tested the strength of all businesses and has exposed everyone’s weakness. It’s time to learn the lessons and build resilient . In this video, I explore a 5-step model to help build a resilient business that may withstand almost any crisis.
Business owners face different challenges at any given point in time. Some businesses are better equipped with overcoming crises than others. The question is, what makes one business able to withstand and overcome a crisis better than others? What do they do differently?
Resilient businesses are built over time. Here’s a 5-step model, essentially a series of questions to ask yourself to help you build your business’s resilience.
Question 1: What is your business model?
Your business model is defined by these four key questions:
Who are your core customers? These are your customers, the customers whose business generate a significant percentage of your revenue.
How do you solve the problems of your core customers? There are two things to consider in this question. The first is that you should know what problem that you are solving. How you solve it is your value proposition. Remember the adage: Customers do not want drills. They want a hole. Using this analogy, they do not come to you to buy your product—they come to you because they need a problem solved.
What do you need to in order to deliver? These are the resources (human, financial, raw materials, infrastructure, and related) that you need to deliver your value proposition
What revenue models do we use for our core customers? Put differently, how do you earn revenue from your products and services.
Question 2: What variables in your business model can change?
This second question is very important because it identifies the sources of uncertainties within your business and your industry. These define the variables that, if they change, can drastically impact your business.
How easy or difficult is it for your customers to find alternative solutions to their problems? The answer to this question is not limited to your competitors. This also includes possible disruptors. For example, the hotel industry was disrupted by . E-commerce disrupted the retail sector. How resilient is your business against disruptions?
How stable is your supply of raw materials? Are there substitutes for the raw materials you use? What materials and equipment do you need in order to deliver your products and services? How stable is your supply? Do you depend on a single source of supply for your raw materials? Can you easily find an alternative should supply run low?
How easy is it to train/recruit critical staff and personnel? How easy is it to supplement liquidity should you need it? How often do you need to change your infrastructure/equipment?
These are tough questions. Once you understand your weaknesses and the threats in your industry, you can start addressing the next step.
Question 3: How will changes in the variables affect and impact your business?
The question requires you to draw up scenarios for when the variables you identified above suddenly changes.
What if your core customers find alternative solutions? How likely are these alternatives to disrupt the industry today?
What if raw materials supply become unstable? What if you lose critical staff and personnel? What happens if you run into liquidity problems?
How will changes in the above affect your revenue and profit? Will these force your business to close down?
Again, the above are tough questions. But we need to confront these tough questions to start planning for them and move on to the next step.
Question 4: What can you do today to prepare your business for any changes that might happen?
This fourth step is what many call business continuity planning. Once we have predicted the scenarios, we start creating plans to address these scenarios.
What can you do today to prevent disruptions in the industry? Do you start exploring these alternative solutions and offer them yourself? Or do you make the first step and start the disruption in your industry?
What about raw materials and equipment? Do you need to start upgrading equipment and infrastructure? Do you need to source new raw material? Do you need to find new suppliers?
What kind of training and development will your staff and personnel need in the long-term? Do you need to work on your cash position? Do you need to work on your cash flow?
Question 5: How do you execute the business continuity plan?
Once you’ve identified the things you need to work on, the next step is to identify the individual steps you need to take to bring your business to where you want it.
If, for example, you want to disrupt the industry, identify the steps that you need to take to get there. What kind of research and development will you need? What kind of equipment and infrastructure upgrades will you need? What kind of skills will your staff and personnel need? Do you need to hire new people?
If the process sounds complex, you do not need to stress out too much. Business continuity planning is a complex process. If you feel that you need help, find help. Maybe you need a team of advisors to help you oversee the changes that will take place in your business in the next few months, maybe even the next few years. Do not be afraid to bring in someone from outside a business—may be a mentor or a coach to help you through the process.
The goal, after all, is to make your business resilient. Many times, doing so requires a different set of skills, a different perspective, and maybe even experience in this kind of process.