C.F. Kettering once said, “Making accurate predictions of the future is a difficult, if not an impossible task, however the process of forecasting can be valuable.”
In some cases, clear trends or changes can be predicted with confidence and where that is not the case, looking into the future helps identify potential risks and opportunities. History teaches that there will be events – significant events – that you, or even the experts simply don’t expect. While you can’t plan for all possibilities, you can prepare to be more resilient to sudden changes.
The most difficult task is taking the time to step back and think strategically about how the events going on around you may potentially affect your business in the future. The next step is to then consider how you could better prepare your business for these changes. With some additional investment of time, you as a small business owner, may identify many of the risks and opportunities ahead.
We are now going to take the time to consider some of the potential opportunities and challenges that small businesses should consider over the next decade.
Think About Issues and Forecasts
Macro-economic changes have large impacts on small business. While economic forecasts are available, like weather forecasts beyond a few days out, they are of limited use. Economic forecasts are subject to ‘groupthink’, while the economic environment can change quickly. The most rational response is to put most effort into preparing for the unexpected, rather than relying on economic forecasts.
Given the uncertainty, you should consider how resilient you are to changes in economic conditions, particularly the availability of finance, consumer demand and exchange rates. Demographic change In contrast with macro-economic changes. Demographic changes are gradual and relatively predictable, so they should be considered in long-term planning.
How resilient are you really?
During economic downturns, small businesses may be hit with falling demand, increased risk of customers defaulting and a reduction in the availability and affordability of finance. It is prudent that as a small business owner, you consider how you would see out such a scenario.
Implications of the ageing population
As is commonly recognized, the population is ageing. By 2024, age 65 and over is projected to increase from 19% to 25%. The general population is projected to grow at around 1.25% per annum. As people age and retire, their spending habits change. They spend more on health services and leisure and less on housing. There are also workforce implications due to a reduction in the proportion of young workers and the possibility of elderly people seeking to stay employed
Though technology and its application are difficult to predict, in the medium term it appears likely there will be continued rapid growth in computing power, data speeds across fixed line and wireless media and the volume of data captured and stored. While it is difficult to predict applications, it appears that the rate at which new applications are developed and adopted is increasing.
An understanding of the opportunities (and risks) may come from considering the extent to which a business involves capturing and analyzing information. The explosion in the amount of data captured may create opportunities for some. However, there are also costs, including the effort involved and the emerging risks associated with cyber security and privacy.
I know that making predictions is difficult. On many issues, the future is highly uncertain. However, there are things that can be forecast with some accuracy and considering possible futures is a key step towards risk management. Perhaps most importantly, a look to the future can help you as a small business owner review how ready you are for change.
It is crucial that you dig into these things.