How to stay ahead of the factors you can't control
By James Walter
We business owners like to make plans for growth and a successful exit, but we rarely talk about this fear for the future: what if someday our business is no longer viable? For all of our short- and long-term plans, the fact is that the business could be affected by factors over which we have no control, such as regulatory changes, market shifts, and new competitors.
The good news is that business owners can keep tabs on trends in these three major areas to fend off closure, or equally bad, irrelevance. Here are some ideas for staying ahead of the curve.
Anticipate regulatory changes. Throughout the course of modern history, pivotal regulatory changes have caused a number of companies to go out of business. One example is the ban on indoor smoking, which caused many restaurants and bars to lose customers and took a large chunk out of the tobacco industry's wallet. The Food and Drug Administration has made hundreds of regulatory changes that have affected a number of industries including food, drug, animal, cosmetic, medical, electronic, plastic, and manufacturing. How can you know what's in store for your industry or field?
- Stay on top of new and proposed industry regulations by following trade publications and websites relevant to your particular niche.
- Develop relationships with people at governing agencies so you can provide insight into proposed changes.
- Speak with a lawyer about options for avoiding any disruption to your operations.
- Watch or read the news and be aware of the campaigns your local politicians are running.
Tune in to your evolving market population. From geographic to demographic variations, from buying behavior to growth opportunities, your market is ever-changing. Avoid being pigeonholed into a niche (or non-existent) market by staying one step ahead of your customers. Remember this is a marathon, not a sprint, and you've got to prepare to go the distance.
- Go to industry conferences and meetings of professional associations that serve your industry or business arena to keep up with market trends and dynamics.
- Find information on the population, resident, and business characteristics for any state, county, or city. (One good source is the City-Data site.)
- Study detailed analytics to gain insight into your sales trends.
- As part of your initial business plan, include specific details about your target customers, with exact steps towards growth.
Keep tabs on the competition. We see it happen far too often. Tablets are replacing textbooks. Netflix beat up Blockbuster. Craigslist disrupted the newspaper classified ads. Expedia (among others) replaced the travel agent. In 1979, pinball manufacturers sold more than 200,000 machines in the United States; three years later, they sold 33,000. Video games killed the pinball wizard.
So how can you predict the next revolutionary disruptor that might be coming soon to your industry?
- Connect with and follow your competitors on social media (LinkedIn, Facebook, Twitter, Google+).
- Track their media coverage and customer reviews.
- Watch their stock and investors (if publicly traded).
- Track their partnerships and event attendance. You might benefit from taking a similar path.
We small business owners can wear so many hats—CEO, CFO, CTO—that it may seem impossible to have time in your day to track all of these potential shifts. That's why it's important to have a clear set of trends and metrics to watch, and to always be aware of your competition. With the tools available today, you'll have clear insight and knowledge to guide you along the path of success. Eliminate any expiration date, and watch everything you've fostered come to fruition.
James Walter is founder and CEO of Finagraph, which provides financial intelligence on demand for lenders, accountants, consultants, and business owners. He can be reached at email@example.com.
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