Business is Booming – For several months, the U.S. economy has, for the most part, remained on an upward trajectory.

The Dow Jones Industrial Average and Nasdaq Composite Index have seen steady gains for several months. Meanwhile, the U.S. unemployment rate remains well below 5 per cent. Expanded hiring and the increased competition for talent have resulted in worker shortages in several industries.

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While many small- and medium-sized businesses benefit from these favourable market conditions, they should not forget there is always a possibility for a downturn. It may come in years, a matter of weeks or even days.

What should small companies be doing now, while business is booming, to help make any future declines less devastating? Here are seven suggestions.

7 Things to do when Business is Booming

1. Maximize cash flow

When the economy is growing, it is no secret that new opportunities arise more frequently, giving companies more chances to maximize cash flow. Credit lines are more readily available, and investors actively seek new investment opportunities. Business owners with a will to grow should take advantage of these conditions to expand and strengthen their companies.

2. Create a growth strategy and execute it

Planning for a rainy day is always good advice. Conversely, savvy business owners should plan for sunny days as well.

Companies should create and execute growth plans when the business is good. These plans identify and respond to new opportunities and trends. They ensure enough employees are on hand to react to increased demand for products and services. A solid growth plan also identifies the areas of a business that are in decline. This allows resources to be redistributed.

However, all growth should be controlled responsibly and sustainably. Expansion should never proceed before additional funding arrives or demand increases.

3. Hire the right people

Increased production, expanded customer service needs, or a rise in sales can require new (and rapid) response times. These favourable business increases can place a strain on a lean staff.

In addition to focusing on efficiencies and productivity, companies should remember that their people produced these results.

The commitment to hiring the right people who align with the overall values and culture of the organization is crucial. This is where solid recruitment and interviewing strategies come into play. Having the actual people in the right jobs is critical to ensuring a healthy business future.

4. Identify inefficiencies and address them

While it is essential to expand human capital resources while profits are up, companies should not forget to examine whether or not employees have the tools they require for continued success.

Perhaps now is an excellent time to make software improvements or replace the ageing computer system that supports the entire company. These types of upgrades to infrastructure increase efficiencies and productivity. They also can improve staff morale and increase overall stability and security.

5. Build and nurture the culture

Too often, employees complain the unique culture that brought them to a much smaller company disappeared once the organization went on a hiring spree. Creating a positive and supportive work environment helps businesses retain top talent. An attractive culture can also assist efforts to recruit new talent.

6. Review employee benefits

Another option to protect a company’s most important asset, the situation of people, is to consider expanding benefits. Doing so can help a small business compete against larger competitors and counter efforts by other organizations to lure top performers.

7. Cross-train and promote

Finally, companies should be mindful of key specialized roles in the company so that if any of those employees suddenly depart, operations can continue without interruption.

One possible strategy is to cross-train employees to perform several organisational jobs. Doing this may also assist retention efforts by giving long-term employees new opportunities to expand their knowledge and grow. It may also come in handy during vacation seasons, providing increased options for granting time off and ensuring high production levels.

5 Things Smart Company Does When Business Is Booming

When business is booming, which is usually a “good trouble” scenario, it is informal to fall into the trap of thinking things will stay that way. They may be, but they probably will not be without serious evaluation, maintenance and investment of time, effort and money. Here are five steps to help you move in the right direction.

Prevent cash flow problems

Managing cash flow for a growing business can be a daunting task. In addition to ensuring you always have enough cash or credit (which you should always prioritize), understanding common barriers and challenges can help you plan effectively. What is important to remember is that the higher the income, the higher the costs.

Higher demand means increased production, from hiring more labour to exploring new supply routes and upgrading technology. These investments often materialize before the revenue from increased sales. In other words, don’t put the cart before the horse. Focus on building a scalable infrastructure while continuing to provide the same level of service, quality, and performance as you do while increasing volume. This will help increase the likelihood of sustaining long-term positive cash flow rather than chart failure.

Maintain a reliable supply chain

No business operates independently. Successfully meeting customer demand requires a continuous supply of goods, so your supply chain is truly at the heart of all your work.

Avoid supply chain disruptions at all costs. Maintaining an open and ongoing dialogue with your existing supplier partners should be a standard operating procedure. Also, an intelligent way to avoid disruption is to diversify your supply chain so you have options if your leading supplier runs into trouble.

Supply chain diversification is not just an emergency strategy; it can benefit your business in both lucrative times and disasters. Regularly researching different product distribution channels allows you to find comparable or even better alternatives and new ideas and opportunities.

Put an exclamation mark on inventory management.

Good inventory management goes hand in hand with good cash flow management. Too often, we hear the story of a brand whose business was so good that it was put out of business, at least temporarily. Poor inventory management is one of the main reasons for this unfortunate and all-too-common consequence. The demand is great, but it only works when you can keep up with the supply.

Inventory management is a careful balancing act. Order too little, and you risk delaying the order, which can lead to frustration, anger, and even loss of customers. Order too much, and you take up valuable storage space, which costs you money for many reasons. This is where automated inventory management software comes in handy.

With the right inventory management system, you can analyze how fast any stock item (SKU) is moving, allowing you to analyze sales patterns, manage lead times, improve forecasting, streamline multi-channel operations, and keep your business growing.

Define pricing strategy

When your product is in high demand, it is an opportunity to raise prices, but this should not be a foregone conclusion. Rising prices can quickly turn a profit, but how will it affect your customer’s lifetime value? Price changes shouldn’t just be in response to competitor moves or sudden changes in the market (I’m looking at you, connoisseurs). It should always be thought through and customized based on a deep understanding of your customers and the value of your product in a dynamic market.

Invest in your business

The extra income allows you to do what you’ve always wanted to do in your business but hasn’t been able to yet. Assess the initiatives you’ve been thinking about or put on the back burner and consider investing in ways that will positively impact your people, your products, and your productivity.

Is there a technology or software you can invest in to improve efficiency? Are there any benefits or training programs you can offer employees to enhance recruitment, retention, and internal growth? Now is the time to make an informed choice about a new product line or acquisition.