I have an acquaintance who supplies products to the small business retail trade. He decided a few years ago that he was happy with the level of business he had. He stopped all forms of new marketing and focused on just keeping his existing customers happy.
He was now comfortable and business was good. What he failed to realize was whilst he was not seeking new customers, more and more supermarkets were opening in the area. They were taking business left, right, and center from the small retail trade.
Yes, you guessed it. Whilst still maintaining his existing customer base, his sales to each of them started dwindling. He realized his mistake far too late when a few businesses actually shut up shop or closed down due to lack of profitability.
A one / two-person business can stay in the comfort zone for a lot longer than a business that employs 15-20 people.
In business usually / around 80% of your turnover pays the bills whilst the last 20% makes your profit. Therefore, if a profitable business loses only 10% of their turnover and all of a sudden the prices you can charge customers to become more competitive — the business is no longer making money.
So what can you do to avoid the above scenario?
First, you have to realize/accept that you are in the comfort zone.
Create a plan of attack to generate more sales.
Evaluate the marketplace you are in and don’t be scared to drop lines that are no longer profitable.
Look at new products to rejuvenate the existing product range.
Examine your methods of working — what worked 5 years ago might not work as well today.
Is it possible to do anything faster, easier, or cheaper with modern technology and new ways of working?
Have a fresh look at your workforce.
Consider training so that you have a skilled workforce ready for the challenges of today.
Have your property surveyed and examine the possibility of relocating.
Has your customer base moved whilst you have been in a state of denial?
Can you use the space more efficiently? Is your property and land worth more for building on than actually running the business?
Have a fresh look at your opening hours. Would you fare better opening 1 hour earlier? What time do you generate most business?
Are you like most businesses that trade Mon-Friday? Do you open 9 am-5.30 pm? Would it be more profitable for you and easier for your staff if you opened at 8 am and closed at 4.30 pm? What about closing 1-day mid-week and staying open all day Saturday?
How do you transport your goods?
Is it more efficient to still run vans on the road when couriers and distributions companies are now so efficient? Vice versa — would you save money or provide a better service by delivering your own goods?
Create a business plan for the next 1, 3 & 5 years.
Have your business valued.
Remember to use baby steps. Tackle 1 problem at a time or get an outside company that specializes in looking at businesses from top to bottom. Sometimes a fresh pair of eyes can often spot what you fail to.
In business, there is no such thing as a comfort zone for most types of small companies. Either you are moving forwards or eventually, you will start to move back. The world is forever changing and those who adapt quickly will succeed whilst those who fail to adapt will disappear. If you don’t believe me than have a look at the top 100 companies in the stock market 20 years ago and see which ones are still in the top 100 today.