Table Of Contents
- How Should You Start To Fortify Your Business For The Upcoming Challenges?
- 1. Draw Up A Long-Range, Scenario-Based Strategy
- 2. Trim Unnecessary Expenses Before They Become Burdensome
- 3. Diversify Your Supply Chain
- 4. Hire Experienced Pros Who’ve Seen Uncertainty Before
- 5. Focus On Higher-Margin Business Lines
- How To Fortify Your Business? Challenges And Opportunities Ahead
Target Global On Fortifying Your Company For Uncertainty: 5 Tips
Executives in critical UK and EU industries like plastics and packaging have grown more cautious in their assessment of the economy’s health.
The most recent survey from the British Plastics Federation, for example, finds just 55% of executives expecting growth, down from 75% in June of 2024.
The story is much the same across other industries and geographies, experts say, due to a multitude of unexpected economic and political shocks.
“The year 2025 is shaping up to be one of the most uncertain, certainly since 2020,” says Yaron Valler, cofounder of European venture capital firm Target Global.
How Should You Start To Fortify Your Business For The Upcoming Challenges?
The year 2025 presents businesses with a plethora of challenges. Yaron Valler, the co-founder of a European venture capital firm Target Global suggests that companies would face several challenges.
In such an uncertain environment, business leaders should fortify their firms for what may come. Doing so could mean the difference between survival and extinction. Valler and fellow Target Global cofounder Shmuel Chafets say this is where they should begin.
1. Draw Up A Long-Range, Scenario-Based Strategy
Hindsight is 20/20 because the past cannot be changed. Predicting the future, of course, is a very different business. To do it well, we must plan for a range of scenarios, hoping that at least one will end up being relatively close to reality as it occurs.
Scenario-based planning is a more intensive and laborious process than simply assuming a future and working toward it. Scenario-based planning allows people to ensure they are in the right place to make the most informed decision. Planners can assume worst-case situations and base their decisions on probability to stay prepared.
The cofounder of Target Global suggests expecting multiple situations based on probability instead of assuming any one.
2. Trim Unnecessary Expenses Before They Become Burdensome
By some estimates, businesses spend $100 billion per year on travel. Much of that is unnecessary thanks to recent innovations like remote conferencing and AI.
The cofounder of Target Global suggests that travel has now become a luxury. Various businesses all over the world spend a lot of money on travelling. People do not need to travel for meetings.
The technological advancements have turned travelling into an unnecessary expense. Businesses should use technologies like online video conferencing and others more for meetings.
Webinars and other formats of training reduce expenditure for the business.
Travel is only one expense category for which your business may overspend.
The cofounder of Global Target has criticised catered lunches and dinners as well.
However, the cost of travelling lunches and dinners is lower than the cost of travel.
The leadership and the businesses should figure out ways to eliminate unnecessary experiences. Businesses should cut costs without compromising the quality of their services and products.
Cutting costs serves as a bulwark against financial stress.
3. Diversify Your Supply Chain
“Never rely on one country, factory, or distributor,” says Melissa Franks, business logistics expert.
Malissa Franks suggests that businesses should not rely on one specific market. Businesses relying on one specific market face problems in the long run.
Businesses should diversify their channels of revenue. The companies that diversify their channels of revenue do not get hampered by uncertain regulatory constraints.
Uncertain regulatory constraints like increased tariffs and changing geopolitics and international relations hamper businesses in specific countries. Leadership- relying on one market and revenue source means having to gamble.
The pandemic laid bare the global supply chain’s vulnerabilities, even for businesses that primarily trade in talent and services.
Soundly run businesses should not put all their eggs in one basket.
4. Hire Experienced Pros Who’ve Seen Uncertainty Before
The current leadership of an organization often lacks the capabilities to tackle challenges. Efficient and experienced people in the market often have the experience to bail a business out of a situation.
A strategic hire or two could put your firm in a stronger position than competitors who don’t see the value in adding “uncertainty specialists” (or, simply, more seasoned hands) to the mix.
External help often has experience, which would reduce the burden on the existing leadership and ensure proper measures are taken.
5. Focus On Higher-Margin Business Lines
Your company’s profit margin is not entirely within your control. Certain industries simply offer higher profit potential than others: 70% to 80% for software as a service versus 15% or less for low-margin service businesses, according to Baremetrics.
Yet within the general constraints of your industry, you can adjust the dials and lean into higher-margin activities during periods of uncertainty.
Think post-commissioning consulting or other value-add endeavors that don’t require significant investments of inventory, equipment, or specialized labor. These business lines may lead to opportunities you couldn’t have imagined before.
You can especially focus on higher-margin business lines if you are from any of the following industries.
- Finance-related industries such as banking and investment
- You can also use this strategy to fortify your business if you are from a non-banking or insurance company.
- Technology businesses, especially in SaaS applications
- Entertainment software
Businesses can diversify their revenue sources, which would help in trying out new ways to generate revenue.
How To Fortify Your Business? Challenges And Opportunities Ahead
The present business climate feels uncertain, even ominous, but it’s important to remember that we’ve been here before. Previous recessions, and worse, have come and gone with the foundations of the global economy intact.
Taking these measures now gives your enterprise the best chance at surviving and perhaps thriving through the challenges ahead. If you prefer, you may consider them a means of turning difficulty into an opportunity.
Your most optimistic competitors have already started preparing for the upcoming situations. The changes suggested in the article would help you, as a founder, to turn the difficulties into opportunities.
Businesses with effective leadership have stated that they are preparing for the upcoming challenges, which can also affect them.
Businesses that adapt quickly do not have to struggle during the crisis. Early preparations help better rather than taking measures during the crisis.
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