Now I don’t usually touch on business topics but 2020 was an undeniably difficult time and I think with most of us working from home now, it would be beneficial to share some ways to make it work for us. For the first time in this generation, the daily rhythms that we’ve come to expect were thrown into question, and it became clear pretty early on that none of us were prepared for it.
In some ways, you can’t prepare for the unforeseeable, but previous generations have certainly been more readily able to cope with significant upheaval. For those who lived through the war, in particular, nothing was a given and everything could change. By comparison, those of us who didn’t live during those difficult days have become largely complacent, and the profitability of our enterprises has suffered as a result.
For business owners, in particular, this past year has seen profitability shake-ups on a broad scale. Some, sadly, didn’t make it, but others have just about come through with a little bruising.
Now, it’s up to us to use the shakeup of 2020 to our best possible advantage. Here, we’re going to consider what the last year has taught us, and how we can apply each lesson to our profit margins moving forward.
Going solely online might not be such a bad thing
In the before-times, the vast majority of businesses operated eCommerce offerings alongside in-person stores. While the success of solely online enterprises like Amazon were definitely appealing, most companies were far too fearful that dropping their physical spaces altogether would do significant damage from a profitability standpoint.
Yet, with physical shop closures enforced by the pandemic, many companies found that operating solely online needn’t be such bad news where earnings are concerned. After all, costs are obviously lower, with domains costing an infinitesimal amount compared with commercial rents. What’s more, the ability to trade online provides previously untapped global reach without adding to workloads, especially if businesses implement location-specific options like the best USD account or other multi-currency solutions. This, alone, can see profits soaring.
And, of course, a look at pandemic-based online business benefits wouldn’t be complete without also noting the soaring use of social media which has allowed businesses to slash marketing budgets and still enjoy higher conversion rates.
Contingency funds really do matter
The importance of contingency funds is hardly an understated business essential, yet pre-2020, countless companies didn’t afford them the importance they deserve. This is especially the case given the trend towards low-cost startups and shoestring budgets, which altogether undermine the important part that savings should play in any business pursuit.
Since the pandemic, however, businesses have seen first-hand why contingency funds should be at the forefront, with many business closures happening due to an absolute lack of savings. In this instance, even companies who were pulling a decent profit from one month to the next found themselves going under within a month or less of disruptions starting.
Moving forward, it’s fundamental (and far more likely) that businesses will work towards putting contingency plans in place that ensure even disruptions don’t lead to money struggles. In an ideal world, this should mean having enough in the caddy to cover around six months of wages, business rent, etc. This may take a while to begin with, of course, because profits are still feeling the pandemic sting. As soon as companies get to grips with contingency saving, however, they’re guaranteed an added level of protection regardless of ongoing disruptions.
Diversification can drive your income
Diversification is one of those hacks that’s always featured highly in business survival strategies for the simple reason that having your hand in many pies means that you should always be able to pull a profit from somewhere. This approach of putting your eggs in many baskets has certainly long been the best way to maximise the value of every customer.
All that said, this past year has made it clear that diversification needs to reach entirely new depths to provide the best profitability possible, no matter what. Specifically, companies could benefit from considering the previously overlooked types of diversification on offer, such as –
- Concentric diversification – Adding similar products or services to an existing business
- Horizontal diversification – Providing new/unrelated products to existing customers
- Conglomerate diversification – Providing entirely unrelated products or services to a different customer base.
Traditionally, the risks and workloads inherent in conglomerate diversification have kept many companies from even attempting this approach. Yet, as 2020 has taught us, conglomerate diversification may be the best path towards profits. Most notably, car manufacturers who embraced PPE production have utilised this method well this past year. In general, though, businesses across affected industries are seeing the value of offering a broad range of services, allowing for continued operations irrelevant of failures in one subsection of a company.
Now what about for the artists and creatives? It might actually be a little easier for artists and creatives to think outside the box and start selling their work and skills online. Don’t believe me? Places like Etsy are great for anyone creating tangible (or downloadable) art of all kinds. Did you used to work in a Gym? Start a home workout Youtube channel or Patreon! Were you a public speaker? Create a Podcast! Chef? Start a food blog and offer paid group zoom calls where people can watch you cook a pre-planned dish and ask you questions live! The possibilities are endless! Facebook groups specific to your area of interest are also great places to promote and advertise what you have to offer, especially now that more people are online and engaging in social media. We all have a skill that others would pay for or an already existing business that has online potential. We just need to think outside the box and realize the many ways we can transfer those skills, ideas and businesses to an online platform.