What Is Future-Proofing? How to Make Sure Your Business Thrives

The business of doing business is evolving at breakneck speed these days. Advancements in technology, evolving consumer preferences, and a myriad of global dynamics continue to present both opportunities and challenges for small to medium size businesses and the leaders who run them. Terms like “resiliency” and “pivot” were almost catchphrases in the early 2020s, as organizations struggled to stay afloat during the pandemic. Those same capabilities also happen to be key success drivers in so many other scenarios today, particularly as they relate to businesses staying relevant in an ever-changing market. It’s called future-proofing your business and it refers to the long-term business strategy for resiliency and market adaptability in a fluid and often volatile environment. Or in laymen’s terms, making sure your business can roll with the punches.

While the execution might look a little different for individual organizations, there are some almost universal approaches to future-proofing that can help your business weather change and keep moving forward with confidence.

What Does Future-Proofing Your Business Really Mean?

Future-proofing is the term for a business strategy that intentionally creates flexibility, and in many ways creativity, into the organization’s operations and long-term goals. It is less about predicting the future and more about understanding what changes are coming down the line and how to either leverage or mitigate them, depending on the circumstances.

Some foundational characteristics of a future-proof business include:

• Market Adaptability: How able is your business to react and pivot to emerging industry dynamics and consumer trends?
• Long-term Sustainability: Are your operations well-positioned for imminent growth? Do you have a healthy cash flow?
• Customer Experience (CX): Have you created a positive CX that helps build relationships and loyalty that transcend current fads?
• Openness to Advanced Technology: How willing and able are you to leverage evolving technology and other improvements to business systems?

Future-proofing isn’t just for the big dogs. Small businesses almost have more latitude for creativity, resilience, and staying nimble than larger companies do. This small-business adaptability was demonstrated time and again during the pandemic. You remember: Dance and yoga studios held their classes online. Restaurants offered delivery and curbside pickup. A 3D printing business that lost manufacturing accounts due to shutdowns, shifted to creating face shields, nasal swabs, and respirators. One TAB Member who owns a medical ambulatory and emergency response company for large sporting events and arenas pivoted to offering mobile COVID vaccination services. The point is, you don’t need to be a multinational corporation to be resilient and meet your customers where they are right now (and where they are headed tomorrow). Future-proofing is equal parts awareness, adaptability, and the courage to evolve.

Why Future-Proofing Packs a Punch

Your willingness and ability to future-proof your business sets the tone for sustained success, market adaptability, an engaged workforce, and a dynamic culture of innovation and continuous improvement. Further benefits and long-term advantages of a future-proof business include:

• Ensured relevance in evolving industries. This doesn’t just refer to tech. Every industry is shifting in response to customer needs, new regulations, and changing workforce expectations. Staying relevant means anticipating these changes and adapting your operations, sales, marketing, communications, and other business assets accordingly.
• Protected revenue streams from sudden disruptions. This could mean mitigating against weather events, regional supply chain disruptions, new competitors, or other negative influences. And, of course, global pandemics.
• Built trust with investors, employees, and customers who value stability and continuous improvement. Forward thinking matters to all key stakeholders in your business, whether they overtly express that to you or not. Nobody who truly cares about the success of your business wants it to be stagnant.
• A competitive edge against bigger competitors. Large businesses are often slower to adapt due to higher costs and a stronger commitment to their original long-term business strategy. But speed and niche expertise allow smaller organizations to potentially capture opportunities that bigger players might miss or simply can’t afford to execute at a massive scale.
• Reduced knee-jerk responses. Future-focused decision making and planning allow more options when organizations are faced with a pivot point or new opportunity for growth. Rather than feeling the need to make rush or stop-gap decisions, future-proofing provides solutions before your business ever reaches the fork in the road.
  
  

The Cost of Not Future-Proofing Your Business

The inherent value of future-proofing is neither theoretical nor speculative. And there are actually substantial costs, risks, and other negative consequences that often come to pass due to avoiding the work it takes to future-proof your business:

• The loss of relevance or market position. For example, consider Blockbuster’s approach to emerging technology in contrast to its innovative, adaptable competitors like Netflix and Redbox. In his recent article on Entrepreneur.com, The Alternative Board President & CEO Jason Zickerman discussed what ultimately caused the fall of Blockbuster. Essentially, the video rental juggernaut failed to future-proof the business even when all market indicators were pointing to new video viewing preferences and technology. Blockbuster’s market share nosedived until ultimately closing all but one modest location in Bend, Oregon.
• High employee turnover due to lack of innovation. Most teams don’t want to be stuck in a stagnant business that refuses to adapt and innovate. Lack of market adaptability particularly affects the retention of your top employees who are best poised to be lured away by your more future-facing competition. So, you likely lose your best people and are potentially left with only those employees who are more than content maintaining the status quo.  
• Costly eleventh-hour pivots that strain resources. During COVID, businesses were caught off guard by the sudden onslaught of mandated slowdowns, shutdowns, and lockdowns, which were understandable but also very costly. Being caught off guard and playing catch up deprives business owners of more diverse options related to suppliers, budgeting, funding, planning, implementation, and staffing. The added costs related to a time crunch can be a real threat to successful change and improvements.
• A hit to your brand and its relevance. There was a time in the 1980s and 1990s when Toys “R” Us was the premiere go-to megastore for children’s toys and gifts. Then along came the internet. For a number of reasons, the retailer didn’t develop a robust e-commerce platform and also had a hard time in their brick and mortar stores, competing on price with competitors like Target and Walmart. The brand had lost its luster, filed for bankruptcy in 2017, ultimately closed all 800 U.S. stores, and laid off more than 30,000 employees.
• Small businesses are especially vulnerable. Just as small businesses are better poised to adapt than their big business counterparts, they are also more likely to fold due to tighter margins, fewer financial buffers, and lower risk tolerance. According to Vena Solutions, approximately 20% of small businesses fail within the first year, and nearly half close within five years. Even minor disruptions like slow-shifting customer preferences or temporary supply-chain hiccups can wreak major havoc on the success and longevity of a small business.

How Do I Future-Proof My Business?

Now that you understand the importance of future-proofing your business and the risk you bear in not planning for change, let’s dive into some practical and actionable steps on how to make your business more resilient and better ready for whatever comes next.

• Diversify client lists and revenue streams. TAB Member Alan Sweitzer, CEO of Royal Catering in Dallas-Fort Worth, was better prepared for the pandemic-induced slowdown thanks to lessons learned years before. In 2006, his business lost an anchor client and 40% of the company’s revenue stream. Sweitzer said "We learned how important it is to diversify our customer list. That way, if we lose a client, it is never more than maybe 8% of our business.” A diverse client list is a safety net that helps mitigate losses and add stability to your business.

To diversify revenue streams, consider goods and services that complement your brand. It is important that any new offerings align with your current goods and services. Ask your customers about their adjacent needs that you may not have considered. Determined the scalability of this expansion to your business.

• Invest in technology. But make sure you do your homework. There is a myriad of automation, AI, and data tools that can help you adapt, innovate, and stay ahead of change. Predictive analytics and forecasting tools like Planful Predict and Workday Adaptive Planning can help you anticipate demand, cash flow issues, and emerging customer preferences.

Consider workflow and process automation tools like Zapier. And customer relationship and marketing automation platforms like HubSpot CRM. The point is, whatever your process, planning, or data needs are, there are many technology options available.

• Prioritize talent development. Invest in training for your management and leadership teams. Consider mentorship programs to ensure you are building the team and talent you need now and well into the future.

The Alternative Board’s High Impact Manager Accelerator Program (HI-MAP) is a manager training program that develops both hard and soft skills like team performance, communication, and change management.

StratPro is a leadership transformation program designed to help teams identify business challenges and turn them into opportunities for growth. Through clear, actionable planning and accountability, leadership teams gain the clarity, direction, and motivation needed to engage their people, drive success, and move their organizations and themselves forward with purpose.

• Stay close to your customers. By keeping an open line of communication with your customers, you are better able to anticipate their future needs, understand their evolving preferences, and discover what is keeping them loyal to your business (or why they are ditching you for the competition). Customer feedback is an invaluable tool in future-proofing your business.

Consider short surveys, post-purchase follow-up calls, and email check-ins. Maybe create customer advisory panels or focus groups to test new goods, services, or branding. Monitor social media comments and direct messages to ensure the conversation isn’t one-sided and that customers’ questions don’t go unanswered.

Your ability for small business resilience and agility is a huge advantage in future-proofing your organization. So, plan ahead. Embrace change. Seek knowledge and continuous learning. Build collaborative partnerships for both innovation and shared risk. Remember, future-proofing is not a one-and-done, but rather an ongoing mindset of anticipating challenges, identifying opportunities, and making thoughtful choices to stay resilient.

Create a Culture of Forward Thinking and Innovation

Future-proofing your business doesn’t just mean adapting to external changes or implementing improvements. It’s really about cultivating a company culture that embraces and celebrates innovation and forward thinking. By intentionally fostering an environment of curiosity, experimentation, and continuous learning, businesses exponentially enhance their capacity to meet the future head on backed by the power and creativity of their entire team.

Forward-thinking cultures empower employees to pose tough questions and design the solutions that will move the business forward. So, design constructive opportunities for discussion. Reward innovative thinking. Celebrate curiosity. Encourage collaboration. Build systems that support experimentation.

When you create a culture of forward thinking your business environment shifts from reactive to anticipatory, leaving the organization far better poised to confidently and creatively embrace whatever future lies ahead.

Build a Business That Lasts

Future-proofing your business isn’t about knowing what tomorrow holds, but rather being ready to mitigate emerging risks and leverage new opportunities as they arise. By embracing adaptability, fostering a culture of innovation, and building a strong strategy, business leaders help ensure the long-term success of their organizations.

Start by auditing your business, not just the hard facts like numbers and systems, but also vision, mission, and your overall culture. Is your team empowered to innovate and collaborate? Are there dynamics that are acting as barriers to forward-thinking? Is your business strategy aligned with your customers’ evolving needs and preferences? Is your business designed to evolve? These are important questions that can be challenging to answer, but well worth the effort.

When you invest time and thought in future-proofing your business, you are not just safeguarding the organization you have already built. You are also expanding on all the possibilities that await you tomorrow and next year and ten years from now. You might not see immediate results or changes to your goods or services, but you will unleash a powerful mindset of innovation and resiliency that will help your business embrace the future and stand the test of time.