Reinvention as a Small BusinessBy
Small businesses are in the unique position to respond to the COVID-19 pandemic by reinventing themselves as more efficient, responsive entities.
Many of us looked forward to 2020 with excitement and anticipated that it would mark a great milestone. While the year 2020 yielded memorable events and developments, most of the emerging circumstances were unwelcome. Since early 2020, people around the world have experienced fear and uncertainty. A desperation has crept in for many small businesses, which leads to a necessity for invention or reinvention. Along with all the challenges comes an opportunity to rediscover the strengths of the small business and leverage resourcefulness and creativity.
Small businesses can benefit from using the tools of inventors and scientists. Business entities can apply the scientific method to business using innovation and invention. This involves a cycle of observation, questioning, developing a hypothesis, experimenting, evaluating results, and drawing a conclusion, which may lead to further observation to begin another cycle.
As management accountants, we have the skills to identify how organizations can become more efficient to reduce costs and increase profit margin while maintaining good relationships in the process. Smaller organizations may observe areas to compete through new product offerings, increased efficiency, and commitment to personal contact. Identifying unmet customer needs and developing marketplace trends will help small to midsize organizations achieve a greater level of success.
Assemble a team to brainstorm and explore the array of possibilities so that the business can emerge from its challenges stronger than ever before.
As small to midsize organizations deal with this new reality of a pandemic and uncertain economic conditions, it’s imperative that they take the necessary steps to remain viable. The role of the management accountant is essential in this process. We are equipped to embrace a vision of the future through strategic planning and innovation. What are your predictions for the future of the organization?
Ask probing questions about your business. Who are your best customers? What is your unique selling proposition? A SWOT (strengths, weaknesses, opportunities, and threats) analysis can be a highly effective tool for small businesses.
What are some areas that are likely to change? Taxation is in transition. Automation is becoming common. Telecommuting may become standard. How will that be managed for security purposes, asset use, downsizing of rental space, and future staff increases? What could be the impact of economic and technological changes on how the business operates and creates value?
Trends have emerged and shifted value from various industries. Identify how external trends may affect the small business in key areas such as revenue generation, customer interactions, technology requirements, human resources, and availability and timing of cash flow.
One key aspect of success that isn’t limited to large corporations is a heightened awareness of the need to increase the number of customer interactions and improve service to raise the level of trust. As large corporations take drastic steps to eliminate or minimize in-person contact, small to midsize companies can differentiate themselves by adding a personal touch to the process, which can add significant value.
Small businesses must use insights to construct a plan and predict the outcomes of various anticipated situations. Use your skills in scenario analysis to contribute to management’s effort as it constructs plans and hypotheses.
The key is to take action and make a change, even if it’s slight. Sometimes a slight course correction delivers big impacts to results. To attain optimal results as small business experiments with new ideas, the team focuses on its key goals and objectives.
Many small businesses aiming to improve engagement with customers have used video-conferencing platforms to conduct sales team meetings and customer meetings and thus extend their geographic reach. They’re doing more email notifications and answering customer inquiries promptly.
Implementing new technological systems and metrics to assess security risks has gained popularity among small businesses. But they must be hypervigilant about cybersecurity.
A full system-wide check is in order as more employees work remotely and may not have secure internet. The associated costs for the increased security are offset by the risk of time and expense were the business system to be hacked or a victim of ransomware.
Invest in long-range goals and objectives and update the organization’s vision for the future. As leaders set goals and budgets for the foreseeable future, they’re likely to identify voids in their assumptions and add “what if” for multiple catastrophes costs. The past year-plus has taught valuable lessons about planning for unexpected outside influences. As businesses create plans for growth, they must consider how to acquire new accounts, evaluate potential scenarios involving customers’ and vendors’ viability, and identify potential effects of adverse economic conditions. Yet most current business plans don’t include mitigating the impacts of widespread illness and government-regulated shutdowns.
The management team is responsible for establishing the flow of information through the small business. Small businesses benefit from close and effective communication, especially in smaller organizations. The fewer levels of hierarchy, the smoother the flow of information through the business. The key to evaluating outcomes is to choose consistent metrics and report results in a timely manner.
Management accountants need to create and implement key performance indicators that measure not only financial aspects but also qualitative aspects that address customer satisfaction, reduction of errors or defects, increased employee satisfaction with the company, and improved levels of communication across all levels.
Once the experiment is completed and the results evaluated, the management team draws conclusions about whether the plan has been effective. This is the time to suggest areas of improvement and course correction. Since change is inevitable, the conclusion should include a set of observations for the next round of experimenting.
It’s imperative that small businesses continue to use available resources to adapt to the many factors that impact their success. The choice is clear: A small business can be either proactive or obsolete. Management accountants play integral roles as business leaders and influencers. Will you and your company see the great opportunity to meet the world’s call for invention?