Unpredictable demand is one of the most common challenges that every small business encounters. In fact, according to the Financial Times, uncertainty is at an all-time high, driven by factors like economic shifts, global events, and changing consumer behaviors. For most small businesses with limited resources, sudden drops or spikes in demand can be overwhelming, but there are measures to control and even succeed despite them.
1) Use Data to Your Advantage
Few small businesses use the power of data in forecasting for uncertain demand. By using tools like Google Analytics, industry research, and sales trends, you can enhance the prediction of demand patterns. Even if it is not feasible to predict every variation, increasing forecasting accuracy gives you a better sense of what could be the highs and lows.
Social media is also a great indicator of recognizing the demands. However, this method also must be done smartly to not pick short-term demands that will disappear in a few months or even weeks. To do this, align the demand with your brand’s long-term vision and track your data from the past months to see real demand patterns.
2) Diversify Your Offerings
Small businesses are prone to depending too much on a single product or service. When demand for the product or service drops unexpectedly, it can be disastrous. For example, if a business started their first product due to a demand that is based on a trend, their sales can drop due to declining demand after a trend fades. This is why diversifying a product or service offer will minimize the risk and can also open up new revenue streams.
3) Be Flexible With Your Team
One of the toughest aspects of variable demand is managing people. During demand spikes, businesses may need more people on board, but during slower times, it seems like too many are on board. Flexible staffing is one way to get through this. Hiring part-time workers, freelancers, or temporary workers can help ease the businesses in the peak-demand periods. This keeps the cost of having a big, full-time workforce down.
4) Stay on Top of Your Supply Chain
Small businesses that have a high reliance on manufacturers or suppliers may experience supply chain horrors when an unexpected surge or slump in demand arises. To remain aligned with the changing demand, businesses must deal with suppliers that know your business’s requirements and can quickly adapt to changes in order volume. This means when the demand drops, you will avoid having too many stocks and shortages when there is a higher demand.
Conclusion
While uncertain demand is a challenging problem, small businesses can overcome it with the right tools and strategies. By improving forecasting, changing products, being flexible with labor, establishing customer loyalty, and maintaining a healthy financial status, small businesses can not only survive but thrive despite the challenges of uncertain demand.
