Companies should always be on the lookout for new opportunities to grow and change. Change is difficult because it’s different than the path you have normally walked. But innovation, challenging the standard, and exploring new opportunities can have a dramatic impact on the future of your company.
A finance professor told a story about business and change:
There once was a time when every family, nearly every adult, owned a buggy whip. This was a big business, and highly competitive. But now, the few buggy whip manufacturers fight over the few, remaining, niche customers. What happened? They didn’t understand what their business was. They thought that they were in the business of manufacturing buggy whips. If they had realized that their business was producing Transportation Accessories, they would still be around today.
That little story tells a big tale. Your focus shouldn’t be on the products that you manufacture, or the services that you make available to your clients, but on the larger view of what benefit your products and services provide to your market, and your unique ability to deliver them. Why do you provide those products/services, and what is it that prompted you to do it? The salient question is:
There is a reason why you do what you do. There are abilities that you – as the business owner – have that are the key to your success. The products that you manufacture and the services that you provide are the product of aligning your desire to serve a marketplace with the needs of your clients. But, the marketplace changes over time. Your ability to serve the market doesn’t. And, the major changes that you have to surmount are probably not ones that are self-inflicted. Here are some game changers that may affect your business:
Case in point – 3M controlled the copying market in the 1950’s, with mimeograph and ditto machines. Then in 1959, Xerox created the photocopier. That changed the industry, and the mimeograph business disappeared.
Case in point – Asbestos is a carcinogen that was widely used in home and business construction, consumer products and was even used in cigarette filters in the 1950’s. It’s still used in some construction materials and automotive products, but currently is not widely used, and companies have spent millions to remove asbestos from their facilities.
Case in point – Cigarettes were widely used by the population following World War II. In 1982, sales had reached 30,000 million packs. By 2017, sales had dropped to less than 12,000 million packs.
Case in point – Of the 15 million cars sold in 1977, only 2 million were imports. By 2019, nearly 10 million of the 17 million cars sold were imports.
The issues that you are currently facing as a result of the pandemic are certainly dramatic. It will likely change business forever for many companies, and a lot of businesses will fail. Some will fail because they couldn’t or wouldn’t react to the market changes that are impacting on their business. Some will fail because the business owner was so focused on the way that they used to run their business that they were unable to think of how they needed to change to stay relevant, to stay functional, to stay useful in the changing market.
With the dramatic changes that are being forced upon you today by the pandemic, what you need to consider is this – what is your core competency? Because no matter what outside forces impact your company, the unique ability that you have, which prompted you to start your business, to deliver needed products and services to your clients, still exist. Think about answering these questions to guide yourself and your company to a new direction.
Being responsible for a business isn’t easy, but to remain successful, you need to consider more than what you’re doing today. Don’t be a buggy whip manufacturer. Think more broadly about what your service or products really provide. Think about what it is that makes you better than the competition. You do have competitors out there, everyone does. But your success comes from being able to pivot faster and with greater confidence than the competition.
Understanding what you’re good at, what you’re really good at, will allow you to shift gears no matter what is thrown at you, whether it be a new technology, government regulations, or an illness. You have faced roadblocks before. It’s your ability to analyze and develop an alternative strategy that allows you to succeed. The size of the roadblock is not the key, how you learn to pivot to a new path is.
Most business owners get financial reports monthly: Profit and Loss, Balance Sheet, Statement of Cash Flows. Some look at them
Often, I’m told by a business owner that they don’t understand why their financial statements show strong profitability for two
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