It is often said that learning is a continual process and that’s certainly true in the business world. Entrepreneur success stories are filled with the insights they’ve gained from setbacks and unforeseen circumstances they’ve experienced. What often sets apart the success stories from the rest is a willingness to learn from mistakes and apply the insights gained to build a better business. A recent study by Frost & Sullivan and Oracle NetSuite surveyed entrepreneurs in Asia Pacific to discover some of their learnings and how they have adapted to succeed through challenging times. Here are three we learned.
Flexibility is vital
The study found that having a flexible business model was the most important lesson learned in the past year according to 31 percent of respondents. This shows that businesses that can adapt quickly to best serve customers are most resilient when circumstances change. Having a robust technology solution is particularly important, especially when you need to rely on real-time data to make rapid, insight-driven decisions when they are needed most.
Entrepreneurs understand this well, which is why over half surveyed say they are planning to make investments in or improvements to their core business software. Almost three-fifths of entrepreneurs are already using some form of SaaS for most or all of their key business applications, but further investments may be needed to enable efficient business operations. For instance, cloud-based enterprise resource planning (ERP) is able to provide a single platform that serves as the business’s nervous system and can be scaled as required.
Fail to plan, plan to fail
It may be an old adage, but it’s certainly true – a failure to plan for multiple scenarios can cause significant setbacks during periods of disruption. That is why almost a quarter of entrepreneurs cited having a contingency plan for their business as the second most important learning from 2020. Detailed scenario planning is key and involves all business units coming together to map out different circumstances and responses. Some additional considerations to include in a scenario plan are:
- Sales forecasts for different scenarios based on internal and external factors
- Working capital, payable, receivable and cash flow-related projections and assumptions to support operational efficiencies
- Cost and budget management to ensure optimisation or reduced spending if needed
- Risk management strategies to mitigate challenges such as supply chain disruptions
Business leaders should assess how easy it would be to implement the contingency plan. If making the necessary changes would be time-consuming or there would be a lack of tools to implement the required processes, business leaders should assess what investments should be made to address these concerns ahead of time.
Cash(flow) is king
Maintaining a healthy cash flow is crucial for every business, so it’s understandable that it was the third most important consideration according to the entrepreneurs we surveyed. There are a few practical strategies business leaders can implement to boost cash flow, including:
- Budget monthly – a monthly cash flow forecast can show potential shortfalls and provide extra time to seek additional cash.
- Access a line of credit – this is a great way to access extra funds, without having to pay interest or other charges when the funds are not needed.
- Offer an incentive to boost cash flow – while your business may have 30/60-day terms, offering a discount for early payment can be an incentive for a customer to settle their invoice more quickly.
- Review profit margins – audit your products and services to determine the full cost of delivering them. PricewaterhouseCoopers found that almost half of consumers would pay more for greater convenience and a more welcoming experience.
- Take stock of financial processes – there could well be internal processes that could be optimised to improve cash flow. For example, if invoicing is taking too long because it requires excessive manual processes, look for ways to streamline workflows. Best in class software provides easy to understand dashboards and automation that can improve efficiency and accelerate payment processes
Successful entrepreneurs use setbacks as an opportunity to grow by taking stock of what can be improved and then investing in ways to do things better. Finding tools that support business flexibility, scenario planning and ways to improve cash flow are areas that entrepreneurs have identified as key to success. Seeing how these pillars can be strengthened is how business leaders build a solid platform for the future.