After creating a business, an entrepreneur is generally filled with a great sense of pride and accomplishment. Nothing is more rewarding than the notion of creating a business concept and releasing a completed, final product or providing a service to the marketplace. Typically, after the creation stage, an entrepreneur has to let go of the reins a bit and allow that needed interaction between the business and the market. It is the crucial interaction between the business and the market that will determine whether the business will be successful. Hence, the reason many entrepreneurs spend a good amount of money on market trends, projections and advertising. These, are all the preparations that a reasonable business owner would have undertaken to ensure the longevity and success of his business.
Having spent some resources on forecasting, business owners are often shocked when the economy takes a turn for the worse. Unfortunately, no amount of forecasting or research could foretell the downturn that the economy will take in the next few years. When the economy turns for the worst, many business owners will find themselves in a difficult time reconciling the projected 5-10 year plan of anticipated profit with the reality of barely making enough profits to pay overheads. Some businesses may not even earn enough to cover overhead costs.
Faced with the challenge of either closing the doors or selling the business, owners should consider a final attempt to save their businesses and ultimately make it prosper by Diagnosing, Adapting, and Expanding their Business concepts.
Diagnosing: Go Beyond the Surface
The first step is to diagnose your business. This type of diagnosis does not require a medical degree. It simply requires an intuitive sense, think of yourself as Sherlock Holmes. To properly diagnose your business you must investigate and come up with the specific reasons why your business is not working. Tapping into your Sherlock Holmes’ skills, you’re probably thinking that you have already solved the problem. It’s a simple: the business is not working because of the economy. However, true that maybe, there is more to it than that. The economy does play a role in why you are not meeting your projected revenues. In addition to that, there is a more direct cause that is intrinsic to the business. It is the interplay between the economy and the unique circumstances of your business that are the determinative factors.
The intrinsic factor will vary for different businesses and may not be easily identifiable. It will not be as simplistic as coming up with a random factor. You must go back to the beginning, review your initial business plan, think back of your original idea, and give great thoughts to what led you to believe that this business, once created would be profitable. To hone in on the contributing intrinsic factor, you must ask take the following into consideration. What did your business take for granted at its inception? What was the guaranteed source of revenue? Answering these types of questions is only a piece of the puzzle.
Adapting Your Business to Match Current Economy
Herbert Spencer coined the term, “Survival of the fittest”. I believe a better phrase is survival of the most resilient. Resiliency is critical to a business’ success because the business must be able to endure and grow with expectations and demands. Some of the most successful businesses are not such because they offer the best product or have the best business model. They have endured because of resiliency and molding to shifting expectations and demands.
Once you have identified the intrinsic factor that is contributing to the decline in your business, you need to re-think and strategize on to overcome it. You can decide to integrate or migrate it into another factor that will help produce business or you may decide to neutralize the factor altogether. Depending on the type of business different approaches might be required.
Expanding your Business Beyond your Original Concept
When a ship is about to sink, everyone’s first thought is to abandon ship. In fact, it sounds like pure madness for a captain to ask his crew members to get ready to board new passengers when they are facing such perilous danger. As counter-intuitive as it sounds, expanding your business is exactly what you need to do when your business is failing. This expansion is not necessarily going to require a lot of financial investment. It will be a simple matter or re-allocating your resources and using your existing business as a doorway to another profitable venture that is in alignment with your existing business. If you are in the service industry, you should consider which other services may lend themselves helpful in conjunction with what you are already providing. For retailer of products think of expanding your customer reach by possibly allowing people to place products within your store for a percentage of the fee or if financially feasible expand in the range of products in type and prices.
Keeping your financial limitations in mind, your expansion ideas must be cost effective, practical. Do not overextend yourself beyond reasonable means. This expansion should require little, if any financial resources. If the only thing that comes to mind requires spending a great deal of money, then you probably need to think it further because spending a lot more money is always the most obvious choice. Take some time and really dig deep for some cost effective methods of expanding your business.
John started a business selling high end Jewelry in a rich neighborhood. He relied on market research showing that people will continue to spend a lot of money on expensive jewelry. Unfortunately John has not been selling a lot of jewelry and of course the economy plays a role. The intrinsic contributing factor is that John assumed that selling high end jewelry exclusively would guarantee him rich customers. He foreclosed the possibility of having customers who could not afford expensive jewelry. To adapt and expand, John has the option of adding some less costly jewelry to his inventory, relocating his business an area that is less affluent, and maybe have customized layaway plans, or start renting jewelry to rich customers for special events (Who knows? They might decide to buy it after renting, either the rental money will come n handy). Notice that, some of these options may come at cots while others might not. But ultimately these options will allow John to Adapt and Expand his Business and ultimately make the business profitable.
About the Author:
Catherine Delcin works as a business consultant empowering entrepreneurs with the necessary tools and resources to bring their entrepreneurial aspiration to success. She holds Juris Doctorate degree of law specializing in Business and has extensive experience with all aspects of business formation. Connect with Catherine at Catherine.firstname.lastname@example.org or connect with her in Twitter http://twitter.com/CatherineDelcin