How long do you think, or did you think – your business model would continue to bring home the bacon?
As business owners, when we write a business plan at the birth of the business, it always shows growth in the financial projections. Because for those that get past year two – this is achievable.
But there comes a time when our model will become out-dated, and if we are slow to change with our customers wants and need, we will pay the price.
We have all seen our local butcher, baker and candlestick maker disappear from the high street over the last two decade – let’s take heed
from these lessons and use that wisdom to build ourselves a plan that will work, even after the death of our current business model.
I looked at HMV in a previous post – they are still trying to find their niche after losing market share to the supermarket giants and the likes of Amazon and Play.com.
The high street music chain has had a challenging few months with sales in its shops over Christmas falling by 13 per cent.
It plans to shut 40 HMV stores, as well as 20 branches of Waterstone’s, which it also owns.
Snow was partly to blame for the sales dip. But they can’t hide the real issue. Their customers are buying from someone else!
UK-wide sales figures from industry body the BPI make for depressing reading and show why HMV is currently struggling.
The number of albums sold in the UK last year fell by 7 per cent compared to 2009. The number of physical CDs (as opposed to digital albums) fell to 98.5 million from 112.5 million the year before. The iPod generation download tracks from home at iTunes.
HMV knows that the industry is changing at an incredible rate and it is diversifying into new areas – gigs, venue ownership and festivals but some say it could be too late.
HMV insists that it has a bright future and they are on the front foot. It’s going to be a rough road ahead but I still believe they can come out of this with a viable business model. It’s just a shame they were slow to react and had no creative foresight to capture a new niche in their sector.
Granted, it is tough to see the future, when – in this digital age, everything is moving so quickly – but we should always cover our downside and if that means factoring in the longevity of our business model then let’s be realistic from day one!
HMV didn’t protect their downside sufficiently to survive a change in their customer’s needs and wants. As business owners in the SME market we learn valuable wisdom from these failures.
We can protect our business by ring-fencing the assets of the company. Keeping them at arms length from the trading company. All the big corporates do this within their structure.
For us,it will protect us from a change in their habits of our customers. We will have a buffer against a fall in revenue and we will have time to diversify, adjust our model and move forward again.
The good news is that with our help this can be done quickly and without massive costs to the business.
In the world of small family businesses we must learn and adapt to multiple strategies. We should be ready for the unexpected – whilst preparing for the future.
At OTHT we meet many business owners who simply do not see the need to re-evaluate their strategy and business model. They believe that there is no need to invest in new ideas, new technology and new operations when the old one still seems to work fine.
It is the old philosophy “If it ain’t broke then don’t fix it!”.
But perhaps we should say “If something isn’t “broke” it doesn’t mean you can’t make it work better.”
In 2011 we need to be on the front foot, keeping an eye on our competition, our customers and the market trends in our sector. One – Two – Three steps ahead of the game!
At OTHT we can keep our eyes on all of the above while you focus on the businesses main concern – making money!