The What And Why Of Future-Proofing Your Business

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For every entrepreneur, business owner, and leader, there’s one Latin proverb that rings true: “fortune only favors the bold”. It simply means taking risks comes with its own greater reward. However, our world is on a constantly rotating rotisserie of inevitable events that affect economics, politics, and society; with the effects bleeding over to harm businesses. Preparing for the inevitable should help organizations better absorb or adapt to challenges such as an economic downturn, conflicts, calamities, inflation, health crisis, and legislative mandates. 

Risks:

Weakening Power of the Dollar

Since the end of the Roman Empire in 476 AD, in more than 2000 years, the world had never experienced a world under a unipolar order but that all changed when the Soviet Union collapsed in 1991. Since then the United States has been the unchallenged dominant power in the world. However, the drastic rise of China is poised to challenge that unipolar order that we’ve been used to for about 30 years. As the global markets begin to shift from West to East the power of the dollar slowly diminishes and with inflation at an all-time high. That said, the contention against the dollar as the fiat currency for global trading would likely continue. The effects of a weak dollar would increase the price for consumer goods made in the US and also non-US-made goods. This means all products are going to be even more expensive than they are right now. 
The word “recession” on decreasing coins. The concept for economic collapse and unemployment during a crisis. People earn less, risk of poverty.

Economic Recession

Market patterns, trends, and indicators may predict an impending economic recession. However, predicting its impact is pretty difficult because there are several factors to consider, such as the duration of the crisis and any precautionary measures used to mitigate its harm to an organization. The stock market crash of 2008, showed that government intervention may come a little too late to stop an economic crisis and members of the public are vocal when it comes to handing out stimulus packages to large companies. Ultimately, the effect of an economic recession may have far-reaching effects on the supply and demand of goods and services that will surely increase the price. And the risk of numerous bankrupt businesses, mass foreclosures, and mass-lay offs is always fresh in our minds. 

High Inflation

Currently, inflation is a hotly debated topic to talk about. As of this day, the inflation rate in the United States is at 3.2% lower than the record high of 8.5% in March of this year. Affects most if not all of the population with the high prices of all commodities. It is widely known that supply and demand cause inflation. With higher demand and lower supply for goods and services which in turn increases the price. However, that is not always the case. In 2022, high inflation rates are caused by several factors such as high oil prices, post-pandemic recovery, and high consumer spending. Inflationary conditions also affect businesses by increasing the cost of production and may create a trade imbalance if they source their raw materials abroad which is mostly the case, as a result of a weakening foreign exchange rate against other countries. 

Solutions:

Cost-effective Solutions

Conducting daily business operations is a costly endeavor for business owners and start-ups. Having a cost-effective solution such as hiring a BPO partner to provide qualified and lower labor wages would help a business lower its operating costs. Thus, providing more resources to meet future uncertainties. 

Contingency Measures

Having a contingency plan is important for every business because it minimizes the risk of exposure. Contingency measures would ensure the continuity of operations. The preparation of a contingency involves intense data gathering such as historical data and current trends within the stock market, geopolitical issues, and domestic policy changes. Whenever a harmful situation arises, the right implementation of a contingency plan should be prioritized. 

Diversify Investment Portfolio and Supply Chain

The saying “never put all your eggs in one basket” still reverberates throughout the business world. Diversification of assets in gold, stock markets, bonds, and cryptocurrencies helps deviate the impact of inflation, fiat currencies, or a recession. Moreover, diversification of the supply chain, products, and service offerings must be taken into account. For example, when a company relies on a specific raw material to produce their goods and a fortuitous event happens to impact that specific raw material by limiting the supply which results in a price increase, the company would have no choice but to raise its prices. With that in mind, a company would lose out to its competitors and disappoint its customers at the same time. 

The Bottom Line

Ultimately, the future is full of opportunities and uncertainties. Being caught off-guard by what is happening around the world is a risky notion that inexperienced business owners would face. Moreover, being vulnerable to any events that may come would result in a disastrous situation for companies. In this day and age, the information available right at your fingertips will help you navigate your business to success. 

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