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Building a financially resilient business

ANZ Financially Ready

2022-08-14 04:30

Key points

  • What is financial resilience?
  • How to improve your business’s financial resilience
  • Measures to build long-term business resilience 
  • Strengthening personal resilience 

Being financially resilient in business is more important than ever. When sudden unpredictable events can bring financial pressure, it’s important to have systems and processes in place to respond.

The financial resilience of a business has long been a key indicator of potential success, both in the short and long term.

What is financial resilience?

In short, financial resilience is the ability to withstand or rebound from financial shocks driven by unpredictable events, such as natural disasters, conflicts, and stock market fluctuations.

External events can test the financial resilience of many businesses, with business owners having to rapidly adapt and respond to ongoing setbacks and restrictions.

Even previously healthy businesses can suddenly face extreme financial pressure. With this in mind, financial resilience is now more important than ever.

Building long-term business resilience

While there’s no universal formula for building business resilience, here are some measures that might work for you.

  1. Have a plan, with achievable goals. Map out the next 1-2 years of expected revenue and growth, identify any future funding gaps and consider whether you would benefit from securing funding to manage these shortages. Be clear about what you’ll need to make your plan work and speak to your advisors if you need help. 
  2. Balance growth with stability. It’s unusual for a business to grow significantly without some form of financing, whether it’s to fund recruitment of staff, equipment, expanding into new markets or premises, or marketing to a new audience.  If you decide you need additional funding to align with your business’s growth, be careful not to over-extend yourself. You’ve got to be prepared for slow periods.
  3. Manage your cash flow & build a buffer. If you haven’t done a cash flow plan and forecast, now is the time to do one. Consider whether you should build in a savings buffer so you’re prepared for higher costs or reduced revenue. This is one area of your business you may want to seek expert help with, such as an accountant, business advisor or business banker.
  4. Build up consistent and recurring revenue. Building a reliable and regular income is one of the ways your business builds resilience. Building a robust business takes work, so invest in your staff and suppliers, look after your loyal customers, and ensure you’re providing quality products/services.

Resilience in a crisis

Facing a crisis might not seem like the best time to start thinking about your financial resilience, but unfortunately unplanned events happen frequently. Often, business owners need to build resilience in the short-term, to help them survive in the long-term. This can often be achieved by making changes to costs, expenses, operations and staffing. 

Resilience isn’t limited to your financial situation

Personal resilience is also a critical and valuable attribute for business owners to cultivate. The ability to adapt is an essential survival skill in a volatile business environment. Don’t forget to look after yourself - your physical health and mental wellbeing can impact your ability to run your business.

It’s worth it

Building resilience takes time, energy, focus and frequent reflection. But it’s worth it. A financially resilient business means you’re better equipped to handle whatever the economy, competitors or environment throws at you.

Next steps

Check out the article The importance of an emergency fund

Create a business plan and set achievable goals using the ANZ Business plan template (PDF 591kB).

Building a financially resilient business
Business specialist
ANZ Financially Ready

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This is general information only, so it doesn’t take into account your objectives, financial situation or needs. ANZ is not giving you advice or recommendations (including tax advice), and there may be other ways to manage finances, planning and decisions for your business.

Read the ANZ Financial Services Guide (PDF) and, if applicable, the product Terms and Conditions. Carefully consider what's right for you, and ask your lawyer, accountant or financial planner if you need help. 

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