It’s easy to get stuck in a cycle of movement and we can all be forgiven for thinking that our business is changing, doing new stuff and improving results, when in fact, it’s not. You’re just going round in circles, embedded in what I call ‘revolving door’ syndrome.

Take a look at the new Bailey’s advert http://www.youtube.com/watch?v=YjW4iFuO-WU They have added a ‘coffee’ alternative to their product range under the pretense that it’s product development but it just feels like a desperate attempt to compete with new entrants to the market. Its false, this isn’t change, it’s just messing about.

Many companies are guilty of ‘re arranging the deck chairs on the Titantic.’ Look carefully at you business, as each month and year passes, are you just revolving or are you truly evolving?

Loosing ones nerve – In the initial stages the start up business owner takes a risky path. Whether it’s a huge investment of money, re-mortgaging, giving up a great job or spending time away from family and friends. He/she is not afraid of digging deep into their pocket, nor their soul, to make things work, deliver a great product, find fantastic customers and grow their business.

Then it reaches a critical point. A place where everything that stimulated the company’s rise starts to slowly diminish. The owner suddenly acquires deep pockets and short arms. Risk becomes too risky and the business starts to lose touch. Touch with its customers, touch with its people, touch with new products/services and touch with new trends and thereby starts the path towards decline.

It can happen for a number of reasons. The owner is financially comfortable and won’t risk that being compromised. The owner is tired. Lets face it, it takes an enormous, unwavering amount of energy to grow a small business and sometimes, we just run out of steam. Or, in many cases, that’s as far as the expertise, knowledge and skills run and its time for someone else to take over, either through acquisition or through a new management team. Recognising this five years ahead of it happening is critical so succession planning can take place.

Planning that far ahead can mean the difference between your company being worth a good sum or absolutely nothing.

Many small businesses have a natural life cycle. They grow steadily over several years, flatten out and then either decline over a period of time or remain in a state of survival until the owner retires or dies. This pattern of ultimate survival will, in the future, no longer be possible. Too much competition, too many inspired people and too many great products will not just nudge a lot of small businesses into oblivion, they will give it a good old, hard boot!

However, there is nothing natural about this life cycle. Far from it! The problems that lead to ‘flattening out’ and demise are failures in leadership and a focus on short terms gains for the owners of the business, rather than following a path of sustained business growth.

The causes can be traced clearly to a number of pitfalls that business owners succumb to over time. Over the next few days I’ll be posting a series of causes. The first one I’ve written about before:

No clear purpose – With no clear purpose it’s damn difficult to drive your business towards its destiny never mind being able to rally the troops and clearly state what your business stands for. With no purpose and no common route map for that purpose, any business will struggle. Purpose gives meaning to what the company is, why people work there, why people buy its products or services and why it actually exists.

Imagine getting in a car with a group of friends and driving off into the sunset without little idea of where you’re heading. Makes a great road trip but its too risky in business, if a little stupid. If it doesn’t get you in trouble immediately, it will in the long run as your company grows and the people working with you demand it. Anyway, how the hell can you create a great team loyal and committed to you without a common purpose?

Not mine but Tom Peters. Thought it was a worthwhile document to read and take on board! It’s got some useful reminders in it….

http://www.tompeters.com/blogs/freestuff/uploads/Heart_of_Strategy_ANN_033009.pdf

There are early warning signs that a business is in trouble:

1. Complaints by the senior team that it never used to be like this.

2. Lots of new competitors taking a large share of what you used to do.

3. Excess provision of what you do in the market place.

4. Your only differentiator is price and, as a result, margins come under pressure.

5. Too much risk management and an excess of market research.

6. Belief that it won’t happen to you.

7. The MD spends too much of his/her time looking over their shoulder.

8. The business is static, gripped in a fever of stand off. Avoid the issue and it will go away.

Big and small, a downturn takes no prisoners. Thousands of business with the above problems are being gobbled up by business with dynamic strategies, innovative thinking and differentiated products/services.

If you are doing one of the above, you’re possibly in trouble. Turn it on its head and change it and rapidly.

Perhaps I’m looking at things too simply but a small dose of reality and less irrelevant analysis is what is required. Why are businesses dropping like dead flies? Why are so many household brands failing? Why are a lot of us not feeling any sympathy for all those heading down a cul de sac with no turning circle at the end?

Common factors for the problems that, WOW, us small business people learn from:

1. Many businesses have borrowed too much to acquire their competitors or grow…..ego!

2. Many businesses have too much overhead, way too much….simple greed!

3. Too many businesses have failed to move with the times…..poor strategy, bad management and lack of foresight!

4. Too many businesses have not differentiated themselves in the market place and are still following a mass marketing route….plain stupid!

5. Far too many businesses have stunted their development by treating their people like any other resources….dumb!

If you are not different you need to be cheaper and if you are not the cheapest or not the most expensive what are you? You are in the middle, average and vulnerable because I, the customer, don’t see the value you offer. Failing to move with the times is unforgivable and unforgiving. Businesses are quick to try and get rid of ‘dead wood,’ now it’s the marketplace’s turn to naturally filter those with that have stood still for too long.

Customers are different

The people that work with us are different

Our suppliers are different

The way we work together is different

The customer/supplier relationship is different

How we make money now is different

The way we use our computers and mobiles is different

The internet is different

How we consume energy is becoming different

The cars we are driving are different (or if they are not now, they will be)

Our perceptions are different

Our expectations are different

You are different

I am different

……than we were three years ago, yet we are still communicating, building business strategies, marketing plans and product development on three year old thinking. Unstable, unsure times bring about two opportunities, those that are missed and those that are taken.

Think into the future (there is one I promise) three years from now. Look back and identify what are the big decisions you have implemented that have made all the difference to performance/growth/survival. You now know what to do next….!!! 

Or is it opportunity? No matter. The challenge is to rise above the crisis most of your competitors are talking themselves into, to take advantage of the chaos that is ensuing and be better and greater than your competition, which, lets be frank, is a lot easier nowadays. The challenge is not to be comfortable, not to stand ‘gassing’ in the corridors about the doom and gloom, not to reinforce the misery that many would believe will happen in the New Year but to stand up and be counted. 

Today is about responding not reacting to the problems. Having the courage to look at your business hard, identify where you have been going wrong. Where you haven’t been as effective as you should have been. Not being comfortable with what you’ve got. Rationalise it a little if you have to. Then looking at better ways forward. Has anybody ever got into trouble for embracing the status quo?

Economic crisis makes it difficult for people to hide. If your competitors are even as good as you, at some point they will squash your grapes so to speak! Being good enough ain’t good enough anymore.

The safer your plans for the future, the risker your business strategy is.