Have you stopped to poke your head up yet?
For many Canadian businesses, the last year has felt like competing in an Olympic-level hurdles race. We’ve weathered one challenge after the next, with a view of “normal life” still off in the distance. People have lost jobs, and businesses have fallen on hard times. Families are caring for ill loved ones, and in some cases have lost those they love to a virus that no one expected. It’s been a time. And despite the grey skies of even our darkest days, somehow we have all continued onward.
Thankfully today, we have reason to be optimistic. Businesses destined for success cut their teeth in times of trial. Bumps and bruises are to be expected. What matters is that we maintain integrity and commitment during hard times. As we move through the second year of the pandemic and into economic recovery, there is good news ahead, and plenty of opportunity to not only survive, but to thrive during this time. Let’s take a closer look at how to thrive during economic recovery.
Recent data from Scotiabank shows a surprising amount of optimism from Canadian businesses. Nearly 80% of businesses anticipate a positive future for their company, with 53% believing their business will change for the better following the pandemic. 68% of businesses expect to return to pre-pandemic conditions by the end of 2021, and 81% of businesses are planning to make investments this year.
Canadian businesses have weathered this storm so well due in large part to their pre-pandemic agility. Emphasis on flexibility, crisis management preparation, and tech advances into e-commerce meant that companies had already stepped in the right direction before COVID struck.
Though the outlook has been overall sunnier than expected, this is undoubtedly a time to be strategic. Here are 3 key actions to take to ensure that profitability is on the incline during your business economic recovery:
Take the time to thoroughly look at every expense and every product offering to see where costs can be cut. This is where you’ll be able to identify low-performing product and service lines, extraneous expenses, as well as potential price increases and new revenue streams.
Delegate and outsource
Particularly for smaller businesses, outsourcing can be key to increasing growth. When a small team has their energy tied up in performing tasks that could be outsourced, the potential for expansion is diminished. Tasks like payroll, bookkeeping, and human resources are excellent areas to begin. It’s important to note here as well that while outsourcing produces efficiencies, it may not directly influence cost savings.
Examine office space
One of the most pronounced trends of the pandemic has been the transition to a remote workforce. It’s time to take a look at your team’s office needs and determine if there is opportunity to allocate some resources as completely remote and find a smaller space. Some companies have been transitioning to a fully remote team and reaping financial benefits in return. You will, however, need to consider the possible impact on staff productivity and workflow.
As you create your strategy for future growth, give ample time and consideration to the digital marketplace. How has your business utilized this market thus far? Are there areas where you could expand your offering? Is your digital presence and/or storefront easy to navigate? Is it a seamless process for customers to purchase from you or interact with you online? With lockdowns continuing into the foreseeable future, it’s critical to ensure that your company is offering consumers virtual and digital options to interact with your brand.
One of the best ways to increase profitability, of course, is to increase the number of customers you’re selling to. But not all customers are created equal. In today’s market, it’s important to have an understanding of the characteristics shared by your best customers, and to seek out more like them. Creating a Unique Selling Proposition (USP) that speaks directly to this target demo can then differentiate your offering from competitors.
Another way to increase profit is to sell more. And the best market to approach for this goal is existing and past customers. Often repeat business requires less cost to facilitate, making the transaction more profitable. Pay attention to customer service and experience, and it’s more likely your business will benefit from repeat clients. Increase your efforts to communicate with current, past and potential customers and clients.
Grow your transactions
By bundling services, cross-selling, and up-selling, individual transaction sizes can be increased. This is one way that repeat customers can be enticed to buy again as well, while also increasing the dollar amount of their purchase. Make sure that your customers understand the breadth of your offering. Remember: They can’t buy it if they don’t know you sell it. But do your best to only market products or services that customers need.
Any conversation about maximizing profits would be remiss to neglect the topic of tax minimization.
With government spending and deficits at record levels in Canada and the US, increased tax rates and mandated compliance are likely inevitable. Accordingly, a tax-effective structure is more important that ever.
The Canadian government has a number of federal and provincial tax benefits for businesses. To learn more, our handy cheat sheet contains extensive information on all the available credits and loans. Click here to learn more about COVID-specific subsidies.
This is an enticing option during an economic downturn, because a business owner is able to freeze the value of the company during a low point, further deferring taxation down the road.
Create an action plan
As Canada climbs out of the COVID crisis, the businesses who have come out on top are those who took the time to prepare a thorough strategy. The world is changing rapidly, and consumer behaviour is changing with it. It helps to have a trusted partner and advisor to assist in creating financial strategy that harnesses the current trends and future predictions to optimize wealth in a sustainable fashion.
The team at Zeifmans has over 6 decades of experience supporting clients as they weather financial storms and ascend to new levels of success through every stage of the business life cycle. Reach out to our team today to start the conversation regarding your business economic recovery.
 Newswire, “Canadian business owners optimistic about post-pandemic recovery, Scotiabank report finds”, https://www.newswire.ca/news-releases/canadian-business-owners-optimistic-about-post-pandemic-recovery-scotiabank-report-finds-860507102.html