Over the past few years, we’ve witnessed significant shifts in the global business landscape. Businesses, particularly SMEs (Small and medium-sized enterprises), have confronted the trials and tribulations of market disruptions head-on, teaching us valuable lessons about resilience and strategic planning.
The whispers of a looming economic downturn are growing louder, prompting business owners to strategize for the future. This article explores how effective planning can enable businesses to weather economic uncertainties and emerge stronger, and what you can do as an advisor to better serve your clients. Check out 15+ resources to get you thinking about ways to get new clients!
Embracing the Post-Great Resignation Era:
One of the most fascinating narratives of our recent business environment is the aftermath of the “Great Resignation.” The mass exodus of employees seeking better opportunities has shifted the responsibility to employers to align with the evolving workforce expectations. This task is challenging enough in stable times, let alone during economic uncertainty.
However, proactive business owners who have initiated future-oriented planning often have an answer to such dilemmas in the form of ‘Golden Handcuffs.’ This concept encourages the retention of key employees and next-tier management by offering incentives that encourage long-term commitment. Encourage your business owner clients to build relationships with key employees early on, solidifying this idea of employee retention.
These benefits, ranging from exceptional compensation packages to opportunities for ownership and unique perks, are vital elements of a resilient business plan. In the face of economic downturns, such strategies can reduce the risk of losing critical talent to competitors offering greener pastures.
Strengthening through Client Diversification:
Recessions typically impact a broad spectrum of clients, often leading to reduced demand and shrinking margins. Here’s where the age-old wisdom of diversification proves its worth. Having a diverse customer base is not just a driver of your client’s business value but also a critical component of planning for a successful future.
Ask your client, “What would happen if you lost one or two of your biggest customers?” If this thought causes unease, it might be time to consider diversifying.
You can achieve this by:
- Developing competitive advantages within products and services.
- Recruiting strategic management personnel capable of tapping into new client segments.
Guarding The Fort:
As interest rates and inflation costs continue to rise, so do the costs of doing business. Therefore, safeguarding your client’s assets, especially against the siphoning effect of taxes, becomes increasingly vital. Most business owners cherish the idea of minimizing tax obligations.
However, not many take proactive steps to achieve this goal. This is where you come in as an indispensable advisor. No matter what your client’s goals are, BEI tools and resources empower advisors to approach any planning conversation with confidence.
The significance of tax minimization becomes particularly critical during economic downturns, as the savings can be channeled towards business operations, investments, or incentivizing top-tier management. The earlier tax-minimization strategies are implemented, the better prepared your clients will be.
Are you interested in learning more about tax-minimization strategies? Business and Legal Advisors & Madison Fund Service, Ltd. (Madison Tax Advisory) are both BEI Strategic Alliance Members and excel in tax planning & minimization strategies.
The Bottom Line:
The intersection between planning for a prosperous future and preparing for a potential downturn is more significant than many business owners realize. Proactive planning can bolster your client’s business against the challenges of economic uncertainty. Not convinced? Check out Why Business Advisors are Essential for Planning a Successful Future!
We are dedicated to assisting business advisors in identifying and prioritizing their objectives concerning their clients & businesses, employees, and families. If you’re ready to discuss your future goals and gain insights into possible paths to achieve them, we’re here to help. Feel free to contact us at your earliest convenience.