For the times ahead, it is crucial to position your service or product as essential and safe. The pandemic and looming recession will lead to customers spending on only essential commodities or services.
-How the pandemic crept in without announcing
We started this year with war threats from America and Iran. We didn't see COVID-19 coming, but here we are! Billions lost, millions infected, thousands of dead, and a looming recession. From all credible indicators, the times ahead will be tough for medium and small-scale entrepreneurs, especially creatives. What's coming next? and how do we prepare our businesses for unexpected scenarios?
There are hundreds of businesses that have survived for more than one century. Boschendal winery in South Africa, Berkshire Hathaway in the USA, Enterprise group in Ghana, and The Marinelli Bell Foundry in Italy are some of the many companies that have lived through wars, recessions, pandemics, and change in civilization.
Preparedness and dynamism are the two common denominators for these progressive businesses. Being dynamic without being prepared or vice versa usually never ends well.
Regardless of how juicy any sector is in an economy, there will be struggling businesses, thriving businesses, and bad businesses. The same concept applies to less lucrative sectors. Therefore, running a business successfully is not just about being in the right sector or niche; it is mainly about conducting your business in the right way.
Companies like Eaton's in Canada, Bikkai in Ghana, Eleganza in Nigeria, and Kodak in the USA are some of the thousands that have bitten the dust. A quick look into the stories of why they failed, we can consistently draw a pattern.
Kodak invented digital photography. In the age where billions of pictures are taken daily, a few years ago, no one would have imagined the possibility of Kodak going bankrupt.
Kodak was well prepared for the digital age, much that in 1975, it invented the world's first digital camera. The business made most of its profit from film sales, making it resistant to ideas nullifying the use of films for storing photos. However, Facebook paid one billion dollars for Instagram in 2012; the same year, Kodak went bankrupt. Kodak was prepared but not dynamic.
Eleganza industries in Nigeria is a different story. Owned by Chief Rasak Okoya, the Lagos based group of industries was very dynamic in its operations. Running multiple industrial complexes and diversifying their product line as the market required.
Eleganza had a significant market share in West Africa, manufacturing a wide range of products, from pens to jewelry, plastic products, among others. However, the company was not prepared for external factors, and before they could blink an eye, Chinese products flooded their market. Eleganza was dynamic but failed to prepare.
Dynamism and preparedness, especially for medium and small-scale businesses, ought to be mutually inclusive to get the ideal results.
To curtail the spread of COVID-19, numerous businesses were cut off for being nonessential. However, we could all argue that our enterprises are essential. As a business-performance coach for creative entrepreneurs, I have summarized the best structures employed by successful companies.
A lot of energy is usually expended in maintaining customers and poaching customers for a new product or service. Instead of making a one-off sale to a customer, subscription-based businesses operate on a continuous billing service model. This model enables the company to strike a stable and long-term relationship with the customer.
Disney vs. Netflix: Disney produces several movies spending millions of dollars on each in production cost and marketing. They release their films to the cinemas waiting for reactions from their customers. Lessons are learned from each project and applied in the next. This structure may be successful in certain business climes and times, but it's not the best structure for any weather.
The case is different for Netflix. Aside from committing their customers to a monthly payment scheme, they have a family relationship with their customers. They can collect data on patterns that can help serve their customers more personally. They know what you like to see and when you want to view it. It enables them to implement Artificial Intelligence and Machine Learning models predicting the preferences of the whole market. The model assures them of monthly revenue, which gives them the confidence to onboard new clients on a one-month free trial scheme.
Subscription schemes guarantee a regular revenue flow for your business and create a better relationship between your business and your customers. The structure saves you the stress of hunting customers to survive. Regardless of your product or service, there's always a way to infuse this concept. As a business-performance coach for small scale businesses, I am leveraging on the subscription model. It affords me the privilege of having a personalized relationship with every client and the confidence to focus on delivering value.
"Like Facebook, Uber, or Alibaba, these businesses don’t directly create and control inventory via a supply chain the way linear businesses do. Platform businesses don’t, to use a common phrase, own the means of production— instead, they create the means of connection."
Often, the platform-based model is mistaken to mean only the internet or virtual infrastructure. The idea is for your primary assets to be your customers and your ideas, not office spaces, factories, or delivery vans. It means leveraging on third party assets, which often reduces your business costs and exposes you to broader markets. It does not mean not owning anything at all; it just means you don't expect that you must.
Timbercreek vs. Airbnb:
Excluding the thousands of properties awarded to them by affiliates, Timbercreek owns over 16,000 properties across Canada, making them the biggest landlord in the country. The company was founded in 1999 and had a market valuation of around eight billion dollars in 2019. Airbnb, on the other hand, was founded in 2017, owns zero properties, and has a market valuation of eighteen billion dollars. Although Timbercreek is a company that also leverages on platforms by allowing affiliates to bring their properties for management but not on the scale of Airbnb.
If you aren't already tapping into platforms online and offline, the time to that is now. It is especially imminent for small scale businesses to reduce their cost of doing business and leverage every possible existing infrastructure. It increases the potential to scale and offers dynamism required to survive in these times. Personally, my expertise as a business performance coach for creatives affords me to sell my brand by guest presenting in seminars organized by other organizations, both offline and online.
The world is changing fast, but some things never change. Businesses still need great people behind the scene to succeed. The 'gig economy' is enabling a more nomadic and freelance arrangement for employees. Moreover, employees are now being leveraged as brand ambassadors. For medium and small scale businesses run by a small team, treating employees as a valuable stakeholder can be very profitable.
To avoid insinuations dangerous to the survival of a company's business and reputation, I decline to make live case studies. However, find time to look through Glassdoor's website for an insight on employee ratings and how it affects a business. The companies with the poorest ratings from their laborers are hardly as successful as they should be.
Staffs, contractors, freelancers, and consultants all form part of this block. The dispatch rider who delivers your product might be the reason you lose a customer. Flexibility, welfare, and opportunity for growth are ways to get the best of your labor force.
Every business solves at least a problem for its clients. However, some companies are obsessed with their customers to a fault. Customer-centric companies tend to allow their customers to determine every decision they make. Amazon, YouTube, Apple, and Microsoft are examples of customer-centric businesses. Startups, small scale, and medium scale businesses are in a better position to pay more attention to each customer.
Stitch Fix is a subscription-based online personal styling service. In a single questionnaire, users are asked to fill vital details about their styles and preferences. Stich fix uses artificial intelligence models to analyze the response from the questionnaire and preselect clothes for the customer. It sends it to a human stylist to choose which option is best from the preselected one. By deploying machine learning, Stitch fix might soon be able to build a decision tree model that can predict how the personal stylists make these choices.
Personalized user experience is the new gold, and startups, small scale, and medium scale businesses are in a better position to profit from it. Personally, when I get a new person on board, my next line of action is to know who you are and what I can uniquely do to make your situation better. So, make it a habit to personalize your delivery as much as possible.
It is no more just about the constant need for today's businesses to innovate, but more than ever, they must do so fast. Data is the fuel of innovation. Successful companies are obsessed with data. They try to be ahead of their peers or maintain their monopoly by understanding the appetite of their market and fueling it with new technologies. Being the one to discover a trend or technology or being the first to implement it doesn't make your business innovative. There's a clear difference between invention and innovation.
Apple vs. Kodak
Until 2008, the iPod was Apple's most successful product. Apple didn't invent smartphones. Being an innovative company, the direction of the market was clear to Apple. Apple cannibalized its most successful product in 2008 when it introduced the iPhone. Today, on the back of the iPhone, Apple has become a titan in the technology industry.
Looking at past innovators, film sales were the most significant revenue stream for Kodak in the 1980s and '90s. They were inventing the new camera and picture technologies around films because cannibalizing their favorite product made no business sense to them. Having spent hundreds of millions designing the iPod, Apple didn't hesitate to compete with its own best selling product.
Recently, innovations are tailored around economic prudence, health, and safety in response to the COVID-19 pandemic. How has your business responded innovatively?
Upon the lockdown, among other proactive measures I took, I quickly got the hang of every significant video conference calling app and developed a content strategy to help my audience pull through these times.
All of the above-discussed business structures can be infused into your business culture simultaneously. Preparing your business to withstand any challenge is not a decision to regret. Rigidity in business is obsolete, and it exposes a company at the slightest change in order. Dynamism is a business philosophy that will make your business flexible enough for change.
There are specific measures to be taken to stay in business profitably regardless of the times.
Every business can be argued as essential, some easier than others. However, if you act dynamically enough and prepare in time, it is possible to position your business as safe to patronize (in a pandemic and beyond) and essential to your market.
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