How to Sink Your Business Without Even Trying
I don’t know of a business owner or executive that expects his or her business to fail. I have yet to meet one who believes they’re headed down the wrong path (unless they are already obviously taking on water and are about to scuttle the ship). But here’s a true business Titanic story that should keep everyone up a night.
Earlier this year I was contacted by a company that was sinking fast. A decade ago they had been a leader in their field in terms of innovation and customer acquisition. They had combined services and product offerings revenue well into the eight figures and were headed for nine. But on this day the principals are deciding who to lay off and whether they should mortgage their own homes for a quick infusion of cash. Up until a few months before (their estimation, not mine) it appeared as though things were humming along. They had serviced their clients well and were coming out with new products they truly believed in. What had happened? In the words of one of their principals, “The market has shifted.” I asked, “Why didn’t you shift with it?” Silence…
…then one of the principals spoke up and said, “We’ve been trying…so we have basically cut our long standing services that are now found competitively elsewhere, and put a lot of time and effort into a new product we’re sure can save us. Now we just have to market it.” “How do you know it will save you? Does your audience want it?” Silence again. This time I broke the silence. “How long do you have to live?” “Without something turning around, about six months.”
I agreed to look at their new “innovative” product;
how it was different than anything on the market, it’s
strengths and weaknesses compared to “kinda like”
competitors. (I found there was not “kinda like”
completion – there was already direct competition.) Then I looked at that competition; pricing,
positioning, promotion, sales, product
implementation and value propositions. Did this
company’s product have a distinct advantage?
Sadly, not in any metric I looked at.
I looked at their market to see who would use it; possible new target markets to open, old customers who would adopt this new product, new industries and geolocations to break in to. I found quite a few if the product value proposition could be described well. I also looked at what was trending in the industry which could possibly highlight an upcoming, “ahead of the curve” opportunity or a threat to the longevity of the product. A week later when we got back together I asked, “How did you come up with the idea for this product?” “A current customer was asking for it…so we built it.” A day after our meeting I politely declined working with them. It was a case of too little, too late coupled with an unrealistic, inflexible grasp of their future on their current product course.
There’s one thing that could have saved this business had they done it through the years.
They had worked in the industry for years, kept their heads down with hard work, but never since their inception had they taken a moment to find out what was going on around them. Yes…the market had shifted and demand was now for something new and improved, but they didn’t even know what was going on around them until it was too late to turn the ship around.
Competition had invaded their space and eroded their market share. It always does; one of the reasons why I’m never afraid of competition. But never once did they look up to see how they could move forward in a competitive world. A competitive analysis was never completed even though the competition was constantly torpedoing their hull.
Product development went on in a vacuum. Their history had been one of building a product when a client asked about a needed solution. Then thinking they had something unique to offer they believed the rest of the world would fall in line for it. As in this time around, no one had looked at the audience need, desire, competition or size of the potential market.
If you want to sink a business
without even trying, never look
up to see what’s ahead. Never do
any research. Don’t close yourself
off for a week and complete a
SWOT analysis on a yearly basis,
and by all means develop a product
before you figure out market need, desire and acceptance.
Research should be the first, basic step for everything you do – whether it’s coming up with content, a single blog, a new product or steering the entire company ship.
Good research keeps you in touch with your market. It will also allow you to position yourself ahead of competitors.
It let’s you stack priorities in a logical, knowledgeable manner – anything from a content map to product development - from which you can…
Develop a plan with a reasonable expectation it will work with all “knowns” accounted for, and then…
Everyone will know the direction and what’s needed for implementation or product launch.
You’ll also decide on key performance indicators you can track to monitor the success of your direction, marketing, product or service.
Research is so important that I always do it, despite the fact most clients feel they know their market. Before every project I gather what they have, and then go through the same process I did for this company.
In all my years of experience, can you guess how many companies have presented me with a recently completed competitive analysis, SWOT or market research? Just 3.
Research is not a nicety you hope to get to “some day”. It is a necessity you must take time to complete…or you’ll sink.
When was the last time you did a SWOT analysis, or at least competitive market research?
With an impartial and honest eye, I can do it for you. Just contact me.