With everything going on right now, it is difficult to ignore the feeling of looming uncertainties—political uncertainty, pricing uncertainty, labor uncertainty, financial uncertainty.
If given the chance, these fears can create tremendous anxiety and cause illogical decision-making. A key factor in preparing is to have a strong business strategy focused on your company’s core competencies that also allows for flexibility and real-time adjustments. The following are some items to consider when planning to position your business for success in an uncertain marketplace.
1 Define Your Business Strategy
A defined business strategy is the most crucial component for ensuring the long-term viability of your homecare company. Due to the daily demands and fire drills of running a company, many overlook this step. Those who do develop strategies often diminish their success by ignoring crucial operational components of the business—rendering the strategy obsolete as soon as it’s completed. A properly designed business strategy weaves the mission of the company into the monthly, weekly and even daily activities of employees tasked with carrying out the corporate mission and includes:
- Adequate input from relevant company stakeholders
- A realistic assessment of the company’s short- and long-term objectives
- Identification of achievable steps toward specific objectives and a system to measure progress
- Periodic review of the progress toward objectives and immediate steps for alteration where appropriate
- A means of communicating the evolving plan to employees
When possible, organizations should obtain outside input throughout the strategic planning process and as the plan moves toward completing short- and long-term goals. This input could come from an informal board of advisors familiar with the field in which the company operates, a professional business advisor or an internal executive who is charged with the performance of an unrelated geographic location or sector. A well-developed strategy helps identify internal and external risks to avoid financial strain.
2 Get Your Team on Board
Even the most strategic plan will only be as successful as the individuals who work toward its goals. Employee buy-in and ownership of the plan during daily responsibilities are critical to its success. At this time and always, a large uncertainty for any homecare business is labor retention.
Developing a culture in which the rank and file understand the mission and why things are done the way they are will go a long way toward retaining employees. Arguably, an executive’s most significant responsibility is to create an environment in which each employee has the resources to contribute at their highest level, including access to technical and appropriate financial training, and recognizes what their daily tasks are and how they contribute to the corporate mission.
Employee satisfaction directly affects your bottom line. Creating an environment in which the team can thrive is key to achieving financial success. If your employees are leaving or underperforming, it becomes harder to compete in an economic climate in which qualified workers are scarce.
Executives also need to be mindful of how compensation packages motivate employee behavior as the business and industry evolve. Many firms have a standard package that has been in place for years, despite significant changes that may have taken place in the competitive landscape. These dated compensation packages often limit growth or are even detrimental to the overall goals of the company.
A review of how the company motivates its staff through compensation, completed in appropriate detail, may result in a better use of assets as you work to achieve the strategic mission. A properly aligned compensation program will improve company culture and create a sense of ownership, which increases participation from those employees who have firsthand knowledge of how to improve the day-to-day processes.
3 Understand the Impact of Technology
An unavoidable consideration for any homecare firm is the use of technology for effective revenue cycle management, documentation and general communication. The proper use of software and other technology can be a major asset that allows companies to maintain ideal cost structure by delaying or replacing personnel costs and maintaining the company’s ability to achieve proper margins.
Technology can improve the experience and understanding of clients, employees, vendors and other contractors. A wide range of technology options should be considered to see how they can contribute to the business strategy.
Focus on solutions that allow for timely and accurate sharing of information, which can help limit excessive remediation costs should a major problem surface. But ultimately, technology’s effectiveness depends on the buy-in of the executive team and the customizing of solutions to meet the needs of stakeholders.
4 Monitor Your Cash Flow
Periodic financial results are usually communicated to executives and outside stakeholders on the accrual basis of accounting. Although these financial reports are useful in determining the financial health of the company, they are based on historical results.
Homecare companies should develop and regularly analyze a cash flow model that incorporates seasonal or cyclical trends, anticipated market conditions, changes in key customer and vendor relationships, known capital investments or expansions, costs to comply with new regulations, merger and acquisition opportunities, and tax consequences. The model should then be compared to rolling budgeted results to help leadership identify necessary changes to the existing budget for the future.
Perhaps the most important component of the cash flow model is understanding available financing options. Having proper financing when the company is not under financial strain makes navigating a bump in the road more manageable and allows for the negotiation of financing options from a position of strength, not desperation.