The Tale of the Unlucky, Lucky Entrepreneur

This is a generic tale, representative of several stories I have witnessed in the past. It is not about any one particular businessman, but I know several that can relate to the story.

It begins with a hard working small business owner who finds himself in a very desirable position. Whether due to a great product, or strong people, or a fast-growing market, or lack of competition, etc., the businessman lands in a sweet spot in the market, and becomes very successful. And in this success are the seeds of his undoing.

Lets be clear: for the businessman to create a successful company, even in this sweet spot, he must work hard and work smart. He deserves great credit for building the company and capturing the profits produced by all this work. To use a sports metaphor, once he sees the hole in the line, it still takes a great athlete to run the ball, avoid the opposition, and get to the goal-line.

Too often, however, this great entrepreneur has a weakness. Its roots lie in the fact that the business owner didn't create the sweet spot, he just found it. Sometimes, he just stumbled into it. Consequently, he never really studied the key underlying elements that contributed to his success. Maybe it was a truly unique product, or some innovative marketing, or simply getting into an evolving situation first. Whatever his initial advantage, he didn't keep a close watch on it as things shifted.

What causes a shift?

• New technology arrives on the scene,
• new players enter the market,
• customers begin to look for other options and new features,
• new advances are changing cost structures.

Virtually every key element in a business plan is constantly, and slowly shifting. The entrepreneur who falls into a sweet spot often has trouble noticing these subtle shifts.

Which brings us to the other element of bad luck: the shifts often start in subtle ways.

Why is worse, you ask, for the business elements to shift slowly rather than dramatically?

Why is the slow shift worse?

When the business owner that gets hit on the head by the two-by-four of radical market inflection, he falls down, gets back up, and immediately understands that everything has changed. He knows he can't survive by simply making small adjustments or minor tweaks to his system. He instinctively knows that continuing to do things the same old way will lead to disaster. And so he seeks radical change.

But the subtle shifts are hard to see, and much easier to rationalize. When business is down 2% one year, he can blame it on a new competitor. When business falls another 3% the next year, he wants to believe its because he lost one of his better salesmen. And when the slow, downward spiral continues, he clings to the idea that just doing the old things the old ways (maybe faster, better, harder) will put him back on top.

He was lucky, and had some great success in the past. That success, however, hurts his ability to deal with the future.

Practical Tip of the Day:

    Be pro-active!

• Identify your most profitable line of product / service
• Look for the underlying reasons for this profitability (lack of competition, unique product features, low production costs, etc.)
• Develop a system to accurately chart these metrics quarterly.
• Be prepared to adapt quickly, as shifts occur.

Have you Checked your Brand Today?

One of the biggest buzzwords from the past decade is “Branding”. The word has been used to describe every form of image, from personal to political to commercial. In spite of, or perhaps because of, all that over-use the original concept has become obscured.

In the business environment, the term “brand” is too often used to refer to a company logo, trademark, or slogan. These are the images constructed by companies in order to communicate their message. But they don't equate to the company's Brand.

Your Brand exists in only one place: within the mind of your target audience!

What kind of impression do you make on your customers? That's your Brand. How do prospective buyers perceive your company? That's your Brand. What do people think of when they see your logo? That's your Brand. How does the marketplace rate your business versus your competitors? That's your Brand.

If the buying public thinks of your company as being “middle of the pack”, then you probably have modest sales, limited growth, and mediocre profits. Many small business owners experience these problems, but don't make the connection with their weak Brand.

Surprisingly, I often meet entrepreneurs who aren't concerned about managing their Brand. They focus entirely on their operations, hope that customers will be impressed, and expect sales growth. This strategy may have worked once, but no longer.

A Strong Brand = Solid Profits

Every time a company touches a potential customer, either directly (through sales interaction or advertising) or indirectly (through some publicity, or comments from a friend), the company's Brand is impacted. Every time a customer is happy with the sales experience or unhappy with a service issue, the Brand is impacted. Every time the company's product is used, and it works well or doesn't, the Brand is impacted.

If you aren't happy with you sales growth, or how the market ranks you versus the competition, CHECK YOUR BRAND.

Check inside the head of your customers, both large and small. Check inside the head of those who don't buy from you, preferring your competition instead. Check inside the head of your vendors' sales staff. And (although this is tricky to do) check inside the head of your own sales staff.

Don't be afraid to discover the truth. Therein may lie your future success.


Practical Tip of the Day:

Add a Survey Widget to your company website (there are many available, some free). Ask your site visitors what aspects of your product / service are most important to them. Then ask them how well you deliver on those issues. If you are worried about the answers you'll get, your instincts are telling you that some problems need to be addressed.