Small businesses embrace sophisticated change management strategies

Small businesses make up  97% of all commercial entities across the nation. They are involved in every aspect of society and are truly the country’s lifeblood. 

However smaller businesses face unique circumstances versus their larger peers, such as fewer resources and more constrained balance sheets, which are tricky to navigate. This is in addition to managing the challenges all businesses face, like rising costs and inflation, labour shortages, cybersecurity risks and supply chain constraints.

Getting change fit

Against this backdrop, small businesses must develop strong change management muscles, which support their ability to respond quickly and intelligently to shifts in the operating environment. What’s key is to build the internal skills to handle change in all its varieties.

“Change moves along a continuum from reactive to proactive. Businesses that really thrive choose to adapt and be flexible when responding to consumer or economic changes,” says CommBank’s Executive General Manager – Small Business Banking, Rebecca Warren.

The move to cashless trading, fast tracked during COVID as consumers and businesses preferred to reduce contact with cash, is a great example of the way small businesses can embrace proactive change. Many businesses took this as an opportunity to introduce new ways of working, such as encouraging customers to pre-order and pre-pay for goods and services online. The upshot was lower business costs and more efficient processes.

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Where to start 

It’s impossible to predict all the different forces businesses need to navigate over time. But it is possible to put the right foundations in place to support sustainable change. A sound understanding of cash flow is a great place to start.  

“It’s critical for business owners to reflect on their cash flow cycle, its length, how much money is at risk and their margins. This insight helps them to respond to changes in the business as they happen,” says Rebecca. 

For businesses with overseas operations, it’s vital to appreciate any international currency exposures and to form a view about whether they should be hedged. This involves modelling the effect of a range of different currency scenarios on the business and devising contingency plans.

Of course, financial concerns are just one aspect to good change management. Other considerations include building communication skills and identifying appropriate external change management expertise. This might include finding a lawyer who can help navigate regulatory changes or hiring an external CFO or bookkeeper to assist with a special project.

CommBank helps businesses manage change by sharing customer stories and through networking opportunities so customers can learn from each other. Access to up-to-date financial information also helps businesses make more informed business decisions. There is also a range of material to support small businesses here.

Remember, successful change requires strong leadership. The better the leadership, the smoother the transition. The idea is to build change management skills across the business so everyone in it is used to being adaptable as circumstances change. 

Rebecca’s top change management tips for small business:

• Continuous innovation and creativity are needed to successfully evolve alongside your customers’ needs.
• Bring team members along with you on the change journey, so they have input into what’s happening and so they know change is coming. Capture their ideas and tips and leverage their expertise. 
• Change can be expensive, whether it’s implementing a new strategy or changing a process. So have contingencies in place and take on an adaptable mindset rather than having fixed ideas about any outcomes.

Watch now: Vodcast: Embracing the shift: change management

Things you should know:

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article. Commonwealth Bank of Australia ABN 48 123 123 124. AFSL and Australian Credit Licence 234945.