Fortifying Your Business: Strategic Measures to Prevent Losses

Most businesses fail due to a lack of working capital.

This usually occurs when your revenue is suddenly pinched causing a shortfall in sales and a dip in revenue. Eventually, reduced revenue will push your cash flow into the red and force you to take on bad business debt. 

However, it doesn’t have to be this way. The world's highest-performing businesses can outsmart the market and retain their revenue by minimizing risk and spreading their income sources. 

These high-profile, long-lasting businesses take their security seriously, too. They safeguard against cybersecurity threats and use artificial intelligence (AI) to improve their decision-making and minimize the risk of a breach. 

You can employ similar strategies on a smaller scale to fortify your business and prevent damaging losses. Even small changes, like editing your product descriptions, can profoundly improve your profitability. 

1. Improving Decision Making

Every market is different and every industry requires a unique set of insights and decision-making skills. However, all successful business owners know how to make strategic decisions that prevent losses and maximize gains. 

But, if you’re new to the business world, you may struggle to keep up with financial indicators like operating margin and gross burn rate. This is entirely understandable, as most of your focus is likely on building rapport with customers and developing new products or services. 

Rather than staying up all night pouring over documents and financial paperwork, use artificial intelligence to improve your decision-making. AI uses machine learning algorithms to mimic human thinking and is capable of crunching numbers far quicker than human counterparts. This means that provided you feed the machine accurate information, AI tools can forecast future trends and identify weaknesses in your current business model. 

Just be aware of AI’s weaknesses before turning over the keys to an automated program. AI is trained on real data created by humans, meaning it contains biases. AI programs still produce anomalous results and make mistakes, too. This means you need to meld your business savvy with machine learning’s data-crunching abilities if you want to come to the best decision for your firm. 

2. Reducing Return Rates

Nothing can top the feeling when you make your first sale. Seeing cash come into your business and products leave the shelves is a sure sign that have read the market correctly and are on the right path to find success. 

However, that feeling can quickly fade when customers begin to return your product. Returns are sure to put a hole in your profitability and can be a real source of frustration when you’re trying to balance the books. 

However, you aren’t alone in experiencing high return rates. In 2022, consumers returned $816 billion of stock. This produced 5.8 billion tons of waste and 16 million metric tons of carbon emissions. Concerningly, 41 percent of retailers said they discovered that the returned products were missing or stolen while 20 percent believe they were a victim of organized returns crime. 

As a business owner, you cannot afford to fall foul of returns fraud. Start minimizing costly returns by tracking your return rate. This will give you a solid baseline to work with and will establish clear goals for the future. Minimize the risk of returns by regularly updating your product descriptions. Use customer feedback forms to tailor your offering and be clear about products that run large or have a niche use. 

3. Leveraging Cybersecurity Best Practices

Return fraud isn’t the only form of digital crime that can undermine your profits and cause major losses. Today, businesses around the globe must account for the risk of cybercrime to minimize the risk of costly breaches and lawsuits. The top cybersecurity challenges facing companies today include: 

• E-Skimming;

• Distributed Denial of Service [DDoS];

• Price Wars;

• Phishing.

These cybersecurity challenges can undermine your profitability and completely derail your operations. According to IBM, the average cost of a data breach today is $4.45 million. Depending on the nature of your breach, you may have to pay costly legal fees and will have to notify consumers of data loss. This will damage your brand reputation and will impact your long-term viability. 

Take a proactive approach to cybersecurity by utilizing AI in your defenses. AI programs like those offered by IBM, Crowdstrike, and Darktrace are capable of detecting and responding to threats in real time. This gives you more time to respond and innately improves the integrity of your existing defense mechanisms. 

4. Using Customer Feedback to Address Cricial Issues

Preventing business losses is critical for the long-term viability of your firm. Start by taking a proactive approach to decision-making in your industry by leveraging AI programs. AI can crunch data for you and generate unique insights that empower your decision-making. AI programs can give your current cybersecurity infrastructure a much-needed boost, too, and may be able to prevent costly breaches. Use customer feedback to address other issues, like high return rates, before they spiral out of control. This will improve your brand reputation and put you on a path toward long-term business growth.