Growing a business and expanding sales is a challenge even under normal circumstances, but sales expansion in the future will likely be even more challenging. As a result, businesses should be prepared. Economic uncertainty and a continuing “new normal” of primarily engaging with and hiring employees and acquiring customers virtually are potential obstacles to business growth.
Designing a sales expansion strategy now requires additional focus on overcoming obstacles to business growth. That focus needs to include maximizing growth possibilities with existing customers, effectively employing your risk management strategy, hiring and developing the right people and leveraging technological advances.
In this post, we'll cover six of the biggest challenges to achieving sales growth objectives and cover how credit management solutions like trade credit insurance can help.
6 Obstacles to Business Growth and How to Solve Them
Approximately 20% of CFOs and their direct reports say achieving growth is their biggest long-term challenge, second only to workplace safety (22%). Even prior to the pandemic, 58% of CFOs indicated that achieving growth was an area of concern. In fact, when asked about what effects of a recession concerned them most, “impact on my company's growth ambitions” was the top response (55%). So, what are the biggest obstacles to business growth and what solutions are most effective when facing business expansion problems?
Challenge 1: Being Agile & Staying on Top of Market Changes
Continuous market research is critical. That means paying attention to what your competitors are doing, engaging with your customers and employees about what you’re doing right as well as potential pain points, and having the right technology in place to regularly monitor customer trends. Paying close attention to customer behaviors and preferences and your day-to-day market performance allows your evolution to be proactive versus reactive. But how do you access the most current data about customers, prospects and markets? How can you more quickly and accurately interpret that data to make it actionable?
Solution:
With the right information tools, you can look closely at the financial stability of your clients and track your portfolio risk. That data, when paired with economic intelligence, market trends and industry risk analysis, helps you make informed and accurate business decisions. Allianz Trade's trade credit insurance interface allows users to evaluate credit risk and review the financial health of potential trading partners.
Challenge 2: Effective Cash Flow Management
To survive and grow in a challenging market, your business needs to maintain its cash flow so you have the capacity to invest in opportunities as they arise. Shortening your real payment period, maximizing supplier credit, screening current and potential customers for credit risk, making clear agreements about payment terms, and regularly communicating with your customers and suppliers about cash flow concerns are important.
Solution:
By monitoring existing and prospective clients, as well as overall market and industry trends, you’ll be aware of potential risks to your cash flow. Maximizing reliable customer relationships and setting clear payment terms to customers, partners, and suppliers based on this information will help stabilize your cash flow.
An effective way to better manage cash flow is to purchase accounts receivable insurance (also known as trade credit insurance). Trade credit insurance acts as a safety net to protect your business from non-payment of your accounts receivable. This frees you from maintaining bad debt reserves and helps you protect your capital, maintain your cash flow and secure your earnings while extending competitive credit terms to your customers.
Challenge 3: Expanding Existing Customer Relationships and Taking on New Ones
Customer relationships drive business growth. In challenging times, you have to work harder to keep current customers engaged and satisfied while exploring new ways to grow those established relationships. Becoming too conservative with credit limits can be a barrier to that growth.
When it comes to establishing new customer relationships in uncertain times, you have to be wary of customers that have been with a competitor for a while who suddenly approach you. Could their desire for a change actually mean they have hit a credit limit with your competitor? With regard to expanding business with existing customers, you have to walk a fine line in offering enhanced credit terms or staying with a conservative credit limit.
Solution:
Regularly monitoring your existing customers’ behaviors and engagement can help you identify opportunities to both strengthen the relationship and explore potential growth. The Allianz Trade SmartView platform offers a risk-monitoring service for customers that provides immediate visibility into trade receivables for enhanced risk and opportunity management. You gain valuable insight on the financial health of your customers via a wide range of risk reports. Plus, you can also keep track of your customer’s creditworthiness and capture growth opportunities. SmartView is available via the online trade credit insurance policy management portal.
Challenge 4: Keeping Supply Chain Running
Weaknesses in supply chains, especially internationally, came into clear focus in 2020 as the world scrambled to deal with COVID-19. There is a clear need for more diversification of supply chains, as well as actionable data and insights, to avoid the drastic disruptions, so many have experienced in the last year.
In a 2020 global supply chain survey, 94% of companies surveyed in the U.S., the UK, France, Germany, and Italy reported a COVID-19 induced disruption to their supply chains, with one out of five reporting a “severe disruption.” U.S. companies stand out, as 26% reported a “severe disruption.” Without a stable and reliable supply chain, you cannot meet the demands of existing customers, let alone grow.
Solution:
First, working with a large and diverse network of suppliers, when possible, gives you a way to deal with disruptions affecting a single supplier. Looking beyond immediate needs when it comes to inventory and preparing for unforeseen challenges like those posed by the pandemic are now a clear need. Technology that enhances your sales forecasting capabilities so you can prepare for how these projections could impact your supply chain, and data-driven resources that offer clear visibility into your supply chains, can help you stay agile and proactive.
Challenge 5: Standing Out from Competitors
Standing out from your competitors is always important in the quest to grow your business, but it’s become even more critical in these challenging times. Reliability, responsiveness, flexibility and ongoing engagement with customers are essential to maintaining customer loyalty and attracting new prospects.
Solution:
Understand the areas in which your company excels, and engage current and potential customers by emphasizing the value you can bring to them in these areas. The ability to quickly predict, identify and respond to customer needs – building upon trends and shifting customer behaviors and preferences – will put you at an advantage.
Trade credit insurance combines a robust commercial credit database with insurance to give companies the confidence they need to safely grow with accounts poised to do well. It allows your business to increase limits with customers and suppliers as required for that growth with minimal risk and enhanced agility and flexibility. That willingness to grow plus more time to focus on building your brand and engaging with customers can set you apart from your competitors.
Challenge 6: Building a Strong Sales Pipeline
In these challenging times, it might seem as if the need to hold on tightly to existing business drastically outweighs the need to expand. However, building a strong sales pipeline is key to your continued growth. At the same time, you don’t want to focus on less-than-ideal leads or prospects that may increase your company’s financial risks. In addition, if your past sales-generation plan has relied heavily on in-person meetings and travel, you’re likely having to rethink your strategies in favor of digital and virtual engagement.
Solution:
You need insights into the behaviors and trends of both current customers and prospects in your market to determine where to direct your sales pipeline. Once you’ve identified prospects with strong potential, you can align your marketing efforts and contacts to target those specific audiences and develop engagement opportunities that respond to their needs.
Trade credit insurance can help you build a strong sales pipeline in a number of ways. You’ll have confidence that you will be paid for what you sell, so you can offer better terms and raise credit limits to grow sales and enhance customer relationships. You can more aggressively grow sales with a key customer without the worry of concentration risk. If you want to expand to foreign markets, trade credit insurance can help you make strategic credit decisions and offer competitive terms overseas, eliminating cash in advance or letters of credit.
Learn How Allianz Trade Can Help with Safe Sales Expansions
Whether you want to pursue new prospects, expand into untapped markets, or reach out to current clients with new credit terms, Allianz Trade can help you grow your business safely. As your partner for trade risk insights, we can monitor your clients constantly, watch for new risks and dangers in your markets, and advise on best practices in credit management so that you can stay ahead of the competition. With economic intelligence, insights into market trends and comprehensive industry risk analysis, you can feel confident in making decisions to expand sales.
