How to avoid the short-term business trap

It’s easy to worry about immediate cash flow, but considering long-term strategy is essential.

As the world navigates the unpredictable and seemingly ongoing consequences of coronavirus, many businesses are doing it tough. It’s easy to become consumed with what’s happening right now; concerns regarding cash-flow and keeping a business running are real and pressing, but focusing on short-term plans could be detrimental to the future of any organisation. The principles that exist in a stable world shouldn’t change in an uncertain world – in other words, acting strategically rather than impulsively before taking on additional funding or debt could make the difference between the success or failure of a business. When evaluating the market, it’s essential to consider the long-term consequences of short-term business opportunities.

Here’s what you should think about:

Longevity

If you are keen to pivot your business in order to boost cash flow, it’s important to determine whether the opportunity will be sustainable over time. As things return to normal, what does that mean for your short-term pivot? If you believe the opportunity will still be present in a post-COVID world, taking a short-term approach could transition into a longer-term growth opportunity. However, if you don’t think your pivot initiative will be as relevant in a post-COVID world, perhaps you need to consider a different approach.

Risk vs Reward

If you believe you’ve identified an opportunity that could make you money right now, you should consider the level of effort involved in making this work, the financial investment that’s needed, and the return that investment could generate. If you’re taking on more debt for a potentially limited financial return over time, you need to decide whether this opportunity is worth the financial burden. The level of investment you put into a new project should be driven by how far into the future you see it succeeding.

Appropriate funding

When considering both long-term strategy or short-term opportunities, it’s essential to look at your funding options. You need to be able to access the right financial solution with terms that suit you. Check if you can exit from any additional funding without extra costs if the opportunity doesn’t pan out in the way you anticipated. Challenger business bank, Judo Bank offers flexible repayment options with monthly, quarterly, half-yearly or seasonal repayments available to match your cash flow needs; having a responsive and flexible lender by your side is essential in helping your business move through and past COVID-19.

Expert Advice

Asking for input from existing customers will help you determine if a short-term opportunity has the potential to translate into a long-term strategy for your business. Being able to access human and expert support from your bank is also an integral part of helping you determine how to best go about any new venture, be it short or long term. In most cases, businesses need a bank that can help them with the investment required to get on with things. A challenger bank like Judo has dedicated relationship managers who understand the myriad and complex needs of small to medium enterprises (SMEs). These are experienced bankers who have the required level of expertise on capital, financing and risk management to deliver personalised lending solutions appropriate tailored to a business’ needs, whether that be business loans, lines of credit, equipment loans or finance leases.