Op-Ed: If you are a small business, plan ahead!

Starting each year with a clear focus is essential for all businesses to achieve their goals and grow. That is the primary objective!

Small and medium-sized businesses, by nature, must be more proactive and quicker on their feet than traditional larger businesses if they are to prosper and grow during boom times or if they are to survive during challenges such as disasters or economic downturns. 

Historically, SMEs’ reactions to unforeseen economic changes tend to be more impactful than their large business counterparts and can lead to the demise of their operations. Therefore, information, education and preparation are key to maximizing opportunities, maintaining business continuity and surviving economic challenges.

A recent article in the business publication INC. provided perspective on the seven major economic risks facing small businesses in 2024: 

• Resurging inflation – impacting on your operating costs.

• Slowing growth – impacting your revenue stream.

• Tight credit conditions – limiting your access to capital. May be harder and more expensive.

• A potential commercial real estate crash – may have a significant negative impact on the economy. 

• Conflict with China – Impacting logistical schedules and supply costs.

• Impact of artificial intelligence – may affect job growth and your competitiveness.

• The post-pandemic unknown – Have we reached a level of economic normalcy?

Although at times we may think that Puerto Rico’s economy is in a bubble of its own and thus some of these challenges may not impact your business, the reality is that the potential impact and magnitude of these threats to your business is real. To the challenges highlighted in INC.’s publication, you should add our local suite of challenges, which for 2024 are driven primarily by the upward trend in utilities, transportation and labor costs. Thus, you should focus and prepare your business accordingly. 

A place to start are these top 10 areas that all businesses should consider focusing on at the beginning of each year:

Business Planning:

• Understand economic, competitive and regulatory trends that may impact your business/industry.
• Review and update your business plan, setting clear objectives and strategies for the year ahead.
• Have contingency plans (A, B and C).

Financial Management:

• Create a detailed budget and financial forecast.
• Review your cash flow and ensure you have sufficient working capital for economic downturns.
• Evaluate pricing strategies and make adjustments if needed.
• Profit is your most important driver.

Marketing and Sales:

• Develop a comprehensive marketing plan.
• Review your target audience and adjust your marketing strategies accordingly.
• Set sales goals and develop sales strategies to achieve them.
• Aim for aggressive profitable growth early in the year.

Customer Engagement:

• Focus on improving customer satisfaction and loyalty.
• Consider implementing customer feedback mechanisms.
• Explore ways to improve overall customer experience.
• Retention of your customer base is key.

Operations and Processes:

• Streamline and optimize your business processes.
• Invest in technology and tools to improve efficiency and reduce costs.
• Review and update your inventory management and supply chain processes.
• Identify alternative supply chains.

Employee Development:

• Evaluate the training and development needs of your team.
• Set performance goals and provide feedback and support.
• Consider hiring additional staff if necessary.
• Identify areas where cross-training can be conducted.

Legal and Compliance:

• Review your legal obligations and ensure compliance with regulations.
• Update contracts and agreements.
• Consider consulting with legal or compliance experts if needed.
• Identify potential areas of renegotiation that may save time and money in case of an economic downturn.

Technology and IT:

• Review your technology infrastructure and software systems.
• Invest in cybersecurity measures to protect your business.
• Explore opportunities for digital transformation and automation.
• Have an IT business continuity plan.

Market Research and Competitor Analysis:

• Stay informed about industry trends and market changes.
• Monitor your competitors and identify opportunities for differentiation.
• Conduct market research to identify potential growth areas.
• Be aware of any regulatory or government action that may impact your competitiveness.

Networking and Partnerships:

• Participate in industry events, conferences and networking opportunities.
• Seek potential partnerships or collaborations that can benefit your business.
• Build and maintain relationships with suppliers and vendors.
• Rank suppliers and vendors by their level of importance to your business and have a plan to ensure unobstructed access to your most profitable and highest selling items.

Remember that specific priorities may vary by industry, business size and unique circumstances. Tailor your focus areas to align with your business goals and challenges for the year ahead. Additionally, it is crucial to regularly revisit and adjust your priorities as the year progresses to stay responsive to changing circumstances.

Our firm, Global 1080 Business Solutions, specializes in operational sustainability and understands what is needed to prepare your business for unforeseen events or to maximize market opportunities. Let’s chat! Find out more here or contact us.