There’s no doubt that the coronavirus outbreak has already had a dramatic impact on the economy in the UK (and indeed across the globe), with the nation’s GDP expected to fall by a staggering 35% during the second quarter of 2020 alone.
With consumer confidence and spending also plummeting, businesses are expected to lay off a further two million employees nationwide in the coming weeks, exacerbating the economic decline and creating a long way back for afflicted firms.
To minimise the impact of such economic ruin, it’s imperative that companies are able to determine critical success factors and ensuring these are met in the short and medium-term. But what is a critical success factor, and how can you identify those that are most relevant to you?
What is a Critical Success Factor?
In simple terms, a critical success factor (which may be abbreviated to CSF in some instances) is a high-level goal or strategic objective that’s central to a company’s success.
As you can imagine, the nature of critical success factors varies from one industry to another, although there are universal examples such as financial prudence, product development and long-term cost management.
Such factors will not only help to distinguish successful from failing businesses, but they will also have a direct impact on profitability and a company’s true growth potential within a specified time period.
How to Determine Critical Success Factors
1. Create a Collaborative Approach When Tacking CSFs
Before you do anything else, it’s important to knit together a skilled and team that will be focused on CSFs.
This should involve both high-level executives and regular employees, with a view to providing strong and guided leadership that remains focused on achieving the core objective.
A collaborative approach is definitely recommended here, particularly as many CSFs are relatively complex and can be difficult to achieve over time. At the same time, there may be a number of different elements to high-level CSFs, so they’d be impossible to achieve without the input of executives and teamwork between different departments.
2. Engage Employees by Asking for Their Feedback
When achieving CSFs, it’s easy to overlook the hard work of employees and the key roles that they play in driving attainment.
This can create a degree of apathy amongst entry-level and less senior colleagues, which can in turn impact negatively on morale and drive a decline in productivity.
To avoid this issue, we’d recommend that you engage your employees and ask for their own CSFs and the best methods in which to achieve them.
Not only will this create a higher level of engagement and boost the quality of collaboration, but it also has the potential to improve operational processes over time.
3. Make Sure That You Have the Right Funding
Most commercial objectives require cash to fully realise, but the way in which you source investment and secure funding has a huge impact on the attainment of CSFs.
More specifically, it’s important to optimise capital while minimising debt, which is a delicate balance to strike in any business climate.
One great idea is to create a single-strategy portfolio that’s highly focused and overseen by experienced fund managers.
This has the potential to deliver sizeable, long-term gains, which is central to the sustainable success of any venture.
How Conventional Scores Are Stopping Most Millennials From Accessing Credit and How One Company Is Changing That
Credit scores are a barrier to entry for just about everything for millennials. Trust Science® is taking new metrics into account to expand access to credit with Credit Bureau 2.0®
What’s Keeping Millennials From Accessing Credit?
The concept behind a credit score seems simple enough. It tracks your credit history to see if you’re someone that a bank or lender can trust to pay back a loan. However, conventional credit scores just don’t account for the way that millennials and Gen Z handle their finances.
Even where a person would be fully capable and reliable in paying back a loan, the lack of an established credit score can prevent them from accessing credit, or at least from getting as much as they should be able to. That leaves millennials without an on-ramp into the modern economy and it can also jeopardize access to other “credit gated” necessities like housing.
The way that conventional credit scores are calculated is complex but boils down to 5 essential metrics:
- Payment history
- Amount owed
- Length of credit history
- Credit mix
- Hard credit inquiries
You can start to see the issue for millennials when you look at what data goes into their credit scores. For one thing, younger people don’t have a long credit history. Even without other factors, simply being young and only having had so much time to build credit puts them at a disadvantage. However, millennials have also been tending to establish credit later in life compared with previous generations, putting them at a further disadvantage.
The most significant issue here is the credit mix. Different types of credit affect credit scores differently, and millennials generally don’t have a favorable mix. While they might have a credit card or two, they generally don’t have mortgages. These are the most beneficial type of credit to have on your credit report, and millennials really have that going against them.
The student loan crisis also plays a big role. Young people today have much higher student loan debts than previous generations, meaning they have a great amount of credit owed. Not only that, but many can begin to fall behind on payments and see that amount grow. This can quickly send a credit score spiraling out of control.
Student loans aren’t the only threat. When young, some people make poor decisions. They could find themselves making credit mistakes very early on and suffering the fact that those mistakes can haunt their score for seven years in general. That means someone at 25 is still paying for a mistake made at the age of 18, even if they’ve been on the up and up ever since.
It’s clear that conventional credit scores weren’t designed with the current landscape in mind and that young people are being negatively affected. But what exactly can be done about this? One company is changing the way that lenders look at creditworthiness to make it possible for millennials to mitigate these issues.
How Credit Bureau 2.0 Fixes Those Problems
Trust Science is an innovative fintech company that has developed Credit Bureau 2.0, a scoring service that acts as an antidote for lenders, offsetting the problems posed by conventional credit scores. Instead of seeing a lack of credit history, a few negative issues from years ago, or a poor credit mix and ending any credit application, Credit Bureau 2.0 considers a wealth of additional data to generate a more accurate credit score.
Credit Bureau 2.0 expands the data used to calculate credit scores, getting the borrower’s consented, permissioned data and/or acquiring Alternative Data in order to reach a more accurate credit score. For example, those applying for credit can use Trust Science’s Smart Consent™ app to divulge their information safely and confidently to Trust Science, which is working on behalf of the lender that is trying to reach a decision about the borrower. By doing so, young people or other people without a credit history in-country can let prudent financial decisions in other areas of their lives demonstrate that they’re trustworthy for greater credit.
The service is available to a wide variety of lenders, including auto lenders, installment lenders, and single-repayment lenders. It’s in their best interest to find more reliable, deserving borrowers to give loans to, so Credit Bureau 2.0 benefits both sides of the transaction.
Trust Science CEO Evan Chrapko says that “Credit Bureau 2.0 isn’t just about giving borrowers access to more credit than they would have had otherwise. It’s about recontextualizing financial data to give both sides–lenders and borrowers–a more accurate and reliable way to enter into loans in the modern economy.”
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