According to this study conducted by Harvard Business Review, 9% of companies flourished after an economic downturn, independent of their pre-recession standing. The businesses that thrived were able to strike a balance between strategically cutting costs to survive and investing in future growth opportunities, such as spending on marketing, new assets, and research and development. And, as we discussed here, the economy is recovering despite the challenges that the last few years have brought.
In fact, periods of declining revenue often expose areas of weakness in a business, such as inefficient operations, unreliable suppliers, or untapped market opportunities, among others. Now is an ideal time to adapt and position yourself not only for growth, but also to be prepared for the next economic downturn. Businesses should seek to minimize impacts for their customers, suppliers, employees, and investors, while also staying open to growth opportunities.
When setting yourself up for growth in the new year, and as the economy continues to recover, other factors to consider are the lasting effects of the pandemic, such as:
- Expectation of options for hybrid and remote work
- Limiting of unnecessary traveling
- Increased reliance on video conferencing and team collaboration software
- Changes in cost structures and industry standards
- Shifts in company culture, especially for companies that won’t engage onsite as much
With those factors in mind, and with dialed-in financial reporting that allow you to make financially viable decisions, you can begin to consider options for growth. The first step is to consider the fundamentals; before stretching to new areas of growth, your business should assess its cash position, budget, and strength of its forecasts. Bringing in virtual CFO services can help you better evaluate your company’s position and abilities; often, a third party can objectively identify the best trajectory for your business’ growth. We’ll discuss some common areas for growth below. Keep in mind that specific expansion opportunities will vary by industry; we always recommend seeking out the guidance of a fractional consultant.
Growing through an Improved Talent Pool
Your staff is the most valuable resource when it comes to improving and expanding your business. The current workforce is generally more open to exploring new opportunities as post-pandemic conditions have forced workers to reevaluate their priorities. This makes it an ideal time to recruit candidates with highly desirable skillsets, as well as to provide your current staff with opportunities for learning and professional development. Consider refreshing your recruiting practices, or outsourcing your recruiting to a placement agency.
Expanding into New Markets
Barriers to new market entry have decreased as businesses were forced to pivot and adjust in the past couple of years. One potential opportunity for growth is to expand into other markets by offering new product lines or related services. Breaking into a new area can serve the purpose of leveling with your competition, growing your customer base, or satisfy existing client needs. This Forbes article provides expert insight into the steps you should take to expand into a new market.
Executing a Transaction
A transaction—a merger, acquisition, consolidation, buyout, etc.—has the potential to not only increase revenue, but to secure a key piece of the supply chain or to acquire intellectual property or talent that may be selling at a lower price point. Typically, a business executes a transaction to add a product or service, build their catalog, become more vertically integrated for cost efficiencies, consolidate fragmented competition, or add new customers or revenue streams. Though transactions are complex and time-intensive, the payoff is often worth it.
You should evaluate whether or not a transaction would be advantageous to attain one of the objectives listed above. Executing a transaction in this economy could also entail acquiring targets a lower price point, or even selling the business to profit with shifting demands. Any decision should be backed by supporting industry research. This is also an excellent area for a virtual CFO to step in on a fractional basis to oversee the transaction, saving you money and time.
Maximize the time when business is slower (especially at the end of the year) to evaluate new opportunities for growth. If a corporate-level transaction is an option, evaluate your financial position against your competitors’. If a transaction isn’t within the realm of opportunity, look for new ways to expand your business and adapt to the post-pandemic normal. Identify emerging industry needs and adjust your business accordingly. Finding Opportunities for Growth Post-Recession
