Why you must prepare for uncertainty
The last 5 years have taught us about uncertainty and...
The last 5 years have taught us about uncertainty and the impact that external events can have on our businesses, lifestyles and habits. Global events such as the pandemic and the Russian invasion of Ukraine have highlighted the need for energy security, controllable supply chains and excellent fallback plans.
Knowing that we live in an uncertain world is not enough. As a franchise business owner, you must prepare for that uncertainty and consider how you will keep your business viable in the face of uncontrollable and unpredictable pressures.
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Why you must prepare for uncertainty
Uncertainty can impact a business in a variety of ways. External events can determine everything from the cost of sourcing the goods you need to availability of staff and even whether you can even open your doors to the public.
Simple things like inflation can drive consumer spending habits, both in a good way and a bad way. When consumers' budgets are stretched, they prioritize the essentials - food, heating and a roof over their heads. If your products and services are not essential, your customers can abandon your brand overnight and plunge you into financial instability.
Escalating costs outside of your control often result in the need to raise your prices. When this happens, it is easy for consumer trust to become eroded as they feel that they are being taken advantage of, not understanding the pressures you face and the reasons that have led to the cost increases.
Sudden policy changes can impact how much you must pay your staff and modify contractual agreements for paid vacations and sickness. This can impact your affordability and your ability to recruit and retain the staff you need.
These are just some ways in which your business can be impacted by events outside of your control.
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How you can prepare for uncertainty
You must learn from the events of the past. Take the time to reflect on how your business adapted to the COVID-19 pandemic, escalating inflation rates, supply chain fragility issues, sourcing problems and any other events that have impacted your business over the last five years.
How did you handle these events and what was the outcome? If the outcome was unsatisfactory, consider why this was and what you could have done differently to create a better outcome.
Review your risk management plan and discuss your risks with your franchisor and franchise network. Find out from others how they plan to manage their risks and check whether there are any fundamental risks you are not actively managing but should be.
Check your contracts, and carefully read over the terms and conditions pertaining to pricing, sourcing and termination so you understand what you may be bound to should economic conditions change during the term of the contract.
By taking the time to consider what could happen, you are well placed to mitigate these risks and overcome the uncertainties you may face in the future.
