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7 Ways to Fight Complacency in the Workplace and Ensure Success

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A booming business is something to celebrate. Despite dismal headlines related to the pandemic, rising inflation, shortages and pressure on supply chains, many companies in the United States have not only persevered, but succeeded. In fact, the majority of businesses are growing.

A survey by Guidant on small business trends in 2022, 65.3% of businesses are currently profitable and more than 50% are focused on growing their locations and increasing their staff. The same is true for their midsize and larger counterparts – 83% of midsize US companies are be optimistic also in business performance.

Reporting a healthy bottom line isn’t always easy. After all, increased sales and a profitable business are the result of hard work, whether it’s innovative marketing initiatives, sound financial strategies or restructuring – or, in some cases,… ‘a stroke of luck. These companies should be applauded; however, it is important to avoid complacency.

OG Mandino II, author of the bestseller “The World’s Greatest Salesman” said once“I will not let yesterday’s success lull me into today’s complacency, for that is the great foundation of failure.”

Related: Don’t be complacent: 13 proven ways to improve your business

Investopedia names complacency as one of the top six reasons a business fails, and a culture of complacency prevents management teams from anticipating a downturn and other risks that can harm a business.

When a business is doing well, it’s easy for owners and management teams to become complacent – ​​and the proof is in the statistics. A Goldman Sachs survey shows that 44% of small businesses have less than three months of cash reserves face a downturn, and top financial executives are predicting a slowdown of six months or more — but current preparations may not even be enough to navigate it and most don’t have the right financial strategies to deal with it, according to a Coupa global survey.

So, when business is booming, what should be done to avoid complacency and ensure that a business is on solid ground?

1. Ensure sustainable growth

While growth is fantastic, uncontrolled growth can leave a business on shaky ground. Take LuLaRoe for example. Shrouded in scandal, the downfall of multilevel marketing fashion company LuLaRoe (which is now featured in a docuseries) was a victim of its own success. As the company struggled to keep up with demand, quality declined, shipping issues arose, and lack of sales force training resulted in lower sales. Too often, leaders’ focus on growth is short-sighted rather than focused on sustaining it over the long term.

Related: 4 Ways to Achieve Sustainable Growth

2. Maintain cash reserves

A business with cash reserves is more likely to survive a downturn and it is recommended that businesses have at least three to six months to persevere in the event of a downturn. Key to this is creating and sticking to budgets, setting monthly goals, and monitoring cash flow while eliminating unnecessary expenses.

3. Reinvest in your business

There’s the old mantra, “You have to spend money to make money.” Reinvesting profits into improvements that can improve the business or generate wider awareness provides a revenue-generating opportunity. Business improvements include staff training and education, investments in improved software or technology, or, for physical locations, renovation or improved fixtures and lighting.

Businesses can also choose to reinvest profits to fuel growth through a marketing initiative that incorporates tactics such as social media or Google advertising that generate leads and sales. According to a CMO surveybusinesses are ready to increase their digital marketing spend in 2022 to stay competitive.

4. Control costs and debt

When business is doing well, it provides a chance to pay off debt, which lowers the debt-to-equity ratio and leads to a more valuable business. It also increases the credit rating of the business. And lower interest saves money. Although debt is not always bad and can be used as financial leverage, growing debt and high interest rates are a hindrance.

5. Pursue vertical integration

Through vertical integration, the company can own the supply chain of its products. This provides better control and lower prices, allowing the company to increase future profits. Recently, when supply chains are under pressure and in an indirect position, vertical integration is making a comeback in many companies like General Motors, Tesla and Amazon. Vertical integration, however, comes at a price. This can require significant capital outlay and there is often a steep learning curve when scaling the business into a new industry.

6. Mitigate risk and have a continuity plan

When business is good, it’s a great time to take a step back and do a risk assessment to prevent the unexpected from eating away at that hard-earned profit. Few companies are prepared for crises that can derail a business. According a Mercer study, only 51% of companies have a business continuity plan that provides disaster protocols. This is also a great time to review insurance policies and identify any gaps or exclusions that could prevent a critical claim from being paid.

Related: Do You Have a Business Continuity Plan?

7. Consider a captive insurance company

One way to achieve vertical integration while managing risk and accumulating cash reserves is to own a captive insurance company. Captives can purchase a wide coverage for losses, including policies with few policy exclusions. Captives can also insure loopholes in trade policies.

In terms of risk, this ensures that a business can be protected against likely threats with more assurance that the claim will be paid. Since the captive is owned by the company or the owner of the company, the premiums paid minus the claims are retained as profit. Thus, a captive allows a company to vertically integrate by owning its own insurance company. By accumulating profits and providing better protection, a captive insurance company enables a business to be prepared to survive crises and disasters.

While experiencing success, take time to celebrate. Reward your team, open that bottle of champagne, and thank your clients or customers, but don’t fall prey to complacency. History has shown us that business is cyclical and it is essential to take advantage of the good times to prepare for the unexpected downturn.

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