By Andy Perkins, below, MD, International Operations, Vistage
As we enter a new financial year SMEs are readying themselves for a period of growth as the economy continues to recover from injuries inflicted by the pandemic. As revealed by the latest Vistage Confidence Index report, business leaders remain buoyant about the future and are expecting continued improvement in economic conditions in the next 12 months. In fact, data from the report shows that while a striking 66% of business leaders expect revenues to increase, 50% forecast an upward trajectory in profitability in the coming months.
Despite recent news of a recession, new strategic decisions about growth and expansion are still top of mind. Now more than ever, businesses will need to quickly adapt to the new economic reality by renewing pricing strategies, managing costs and customers’ expectations, and aligning with new recruitment culture.
Here are some key considerations that will help businesses drive growth in the unfolding year:
Get a handle on costs
One of the most critical decisions CEOs need to consider is how to manage the rising cost of everything. Unsurprisingly, the report shows that nearly half (45%) cost-saving measures will be a primary driver for profitability in 2024.
To ensure that cost savings measures result in increasing marginal profits, business leaders should consider integrating these strategies as part of their businesses ethos. In terms of day-to-day internal operations, this integration can be seen as a new operational parameter, incentivising employees to operate within a cost-efficient ecosystem. While on a bigger scale the organisation will need to be more cost and time efficient, at an individual level, each employee needs to be clear on what being cost efficient means to each department.
As organisations strive to innovate and create added value for consumers, they inherently drive efficiencies across their operations. By strategically balancing value creation with cost-efficiency initiatives, businesses can position themselves for sustained growth and success in today’s dynamic marketplace.
Evaluate pricing models
As inflationary pressures and input costs continue to rise, more business leaders, 48% based on the report’s findings, are strategically opting to raise prices to protect their profitability. This strategic decision is further driven by a consistently high demand for goods and services.
Choosing the right pricing strategy can help businesses become more profitable while aiming to expand their customer base. However, these decisions require careful deliberation, as they carry the potential to significantly impact competitiveness and customer loyalty.
That’s why selecting the right pricing model is crucial. The key to securing the right balance? Focus on a value-centric approach that keeps the end customer in mind. This means any price increase is justified by a clear and well communicated enhanced value delivered to customers.
Earlier this month, thousands of nail technicians nationwide united to collectively raise their prices, aiming to secure fair compensation and offset rising energy and product expenses. Adjusting existing pricing structures does not come without risks, yet when driven by shared sentiment and collective action, these types of changes can yield sustainable growth for both individual businesses and the industry as a whole.
Invest in top tier talent
We know from survey data that business leaders are proactively planning to invest in talent, and organisational structure in the next quarter to keep pace with rising consumer demand, and predicted growth. Specifically, 25% of all SMEs are looking to recruit for new leadership positions.
Attracting the right talent is one of the major struggles for small and medium businesses, and it’s only getting more challenging as the demand for top talent continues to grow.
As attention turns towards talent recruitment, it’s important for every business owner to understand that today’s job market is different. It’s a job seeker market whereby fewer highly skilled individuals are actively job searching, and there’s a massive demand for their skills and expertise. Posting a generic job advertisement, as you did 10 years ago and hoping for the best, simply doesn’t cut it anymore. If you’re relying on one or two traditional recruiting methods, you might be missing out. Ask yourself, who you are looking for? If it’s a recent graduate, college partners, career counsellors or job fairs might be the way to go. But if it’s a mid-to-senior-level talent, then referral programs, alumni associations or utilising LinkedIn Recruiter Lite to reach out directly will likely be much more effective than posting to a jobs board.
The process of finding qualified personnel has always been a challenge for businesses, and the current economic climate means that business leaders need to continue to think holistically and creatively about how they are attracting a newer labour market.
The new financial year presents the SME community with the perfect opportunity to reinforce company values, as they evolve to meet the end customer’s needs in a challenging yet promising economic environment.
As entrepreneurs and small business leaders focus on building new strategies for pricing, cost management and talent acquisition, it’s now more important than ever to remember to keep mission, vision, and purpose front and centre, as plans materialise and are brought to life.
