Membership in the successful company club has its privileges. However, with those privileges comes responsibility and the need for a more acute sense of the world around you.
You may have been inducted for a number of reasons. Perhaps you invented a breakthrough product while your competitors were asleep at the wheel. Or you are really adept at expanding a loyal client base. Whatever the reason, it feels good to call the shots and to have completed the startup phase of your business.
At this stage, it is only natural to wonder what you could ever gain from reading yet another post on marketing and planning. You have already learned all the hard lessons, right?
Maybe not. You may be setting yourself up for a painful bailout.
Today’s current economic turmoil can consume massive energy reserves, no matter how smart, successful, or experienced you are. Stock markets can rise and fall by hundreds of points within just one day. In 2008, “established” companies such as Washington Mutual and Bear Stearns virtually evaporated overnight. General Motors announced over 5,700 layoffs in the United States and a $2.5B quarterly loss. The future of the U.S. auto industry is in question. Their executive teams chose to ignore many warning signs.
These issues do not just affect mature industries and high rolling financial firms. It can happen when you are celebrating market dominance and industry accolades. When you have strong (if not dominant) market share, the best people, and the highest potential, you feel unstoppable. You focus on what is working and keep doing it. You struggle to benchmark yourself against your competitors because you have surpassed them in too many areas. Yet, if you ignore the subtle indicators that your company’s continued success is threatened, you may never muster the energy, resources, or desire to recover from them. Here are 12 of the most common clues that I have seen:
- Your ideal client’s profile changes significantly.
You will notice when your current clients begin behaving differently, or when your current measures of client retention, client satisfaction, and client experiences no longer provide meaningful feedback. Some companies, for example, conduct customer satisfaction surveys by polling their salespeople. In these times of fickle clients, basing your strategic decisions on second hand information is insufficient.Your whole product changes.
The term whole product is used to enumerate all of the deliverables (products, services, training, etc.) that a customer needs to achieve their objectives. In this scenario, you have expanded your relationships with partners or other suppliers, and now account for a broader slice of the client’s budget. For example, you may have recently acquired a training firm to help you deliver your offerings. Changes in your whole product can significantly affect your company culture, the economic buyers you are calling on, the ages of people who want to buy from you, your gross profit margin, and your sales cycle.
- Clients are no longer willing to pay extra for your offerings.
This sometimes shows up as declining sales morale and longer sales cycles. Now is the time to revisit what makes your product or service unique. If great client service and strong client relationships are your only differentiators, it is likely your product has become a commodity, or your positioning is stale. With the pending threat of company decline, you must modify your growth strategy now. Don’t wait.
- Clients are choosing an alternative solution to satisfy the same need.
You are watching your client retention numbers decline, or Sales, General, and Administrative (SG&A) numbers skyrocket due to a higher cost of sales. If you are losing some of your best clients, quickly determine why the shift is happening. Consider hiring an independent researcher to interview or survey lost clients. Is the alternative solution easier to use, take less time, or cost less? Does it appeal to their sense of greed, safety, or ethics? Gather good intelligence.
- New, innovative companies are entering your market.
Case in point: the automobile manufacturers once boasted industry dominance in the United States. Within the past few months, the “big 3” – General Motors, Ford, and Chrysler– have become “the handicapped 3,” while Toyota and Honda have led the charge in innovative hybrid fuel cars. The Big 3 could have adapted, but were wiped out by Toyota’s innovation and nimbleness. Now General Motors has reverted to questionable marketing tactics, such as trying to persuade auto buyers to take their Chevrolet Malibu Hybrid seriously—even though it boasts a meager improvement of two miles per gallon in city fuel consumption compared to the standard Malibu! You are resisting a new industry shift or technology, even when the market is demanding it.
How much do you find yourself defending your position with your clients? Three years ago, I experienced the perfect illustration of a company’s unwillingness to accept an industry shift when I visited a Mercedes dealer. At the time, I was in the market for a new vehicle. I asked the manager, “What is Mercedes-Benz’s strategy for building alternative fuel vehicles?” It was as if I had uttered the unspeakable. The manager firmly replied that they were focusing on fossil fuel technology for many years to come. I quickly chose to buy another brand. Is your company wearing the same blinders?
- Your key people are married to the way they have always been doing it.
You cannot seem to persuade them to think otherwise. If persistent limiting beliefs define your culture, then selling your business may be a better option than transitioning to a new business model. These limiting beliefs are a surefire way to enter the slippery, painful slope of company decline.
- The owner has an incomplete or nonexistent succession strategy.
This becomes even more of a threat when the founder faces a health concern, a major life change, a strong desire to pursue a new venture, or apathy. It may be time to measure the percentage of completion of that succession plan—and hold the founder’s feet to the fire to stay on track. An outside advisor can help with this process and is downright essential.
- You believe that growth planning and marketing are reserved for large, mature companies.
How many times do you tell yourself “planning and marketing are important, but I am just too busy to do them?” Maybe you have created a sales culture that is obsessed with closing deals, and planning gets second billing. If this continues to happen, your market dominance is in jeopardy. You are unconsciously passing on this limiting mindset to your team and to your clients. Why would they show any emotional stake in your company’s success? You may just be giving them one more good reason to look elsewhere for a job.
- You are struggling to shift from “practitioner” mode to “leader/visionary” mode.
The habits and skills that helped you attain your first few million dollars typically inhibit your ability to generate the next ten million. Think about the skilled experts you have met who excel at their trade, and later decide to star their own business in that field. That could be you…
- You constantly pursue interesting distractions (a.k.a., new ideas, personal pet projects, or outside ventures).
When you keep announcing new projects and strategies, teams lose direction. They do not see how their jobs tie to your company’s success. They become emotionally disengaged. The information overload can also trigger feelings of overwhelm. Overwhelm translates into paralysis. And paralysis impacts top line growth. By asking some key questions, such as “What is our core business? Where do we invest? What growth strategy generates the highest return? What is the risk involved with changing direction?” you can get back on track.
- You become bored with your current business model.
Yes, it happens. You have achieved everything you ever dreamed of. The good news is that things are running relatively smoothly. The bad news is that innovation has slowed considerably. Your business setting feels more like a family reunion than a high-energy, productive work setting.
Watch for these behaviors and trends every day in your company. They just might be the best bailout prevention ideas you will ever need.
Copyright 2010, Lisa Nirell. All rights reserved.