Why EVERY business should reassess its whole business model, NOW.

8 out of 10 entrepreneurs who start businesses fail within the first 18 months, according to Bloomberg.

If you're a business owner, entrepreneur or whatever term you prefer to run with and passed the 18-month mark, give yourself a pat on the back. You're in the winning 20%.

But wait, you're not over the hills and into the sunset sipping your cocktail on the beach for 6 months of the year. Oh no, what a myth sold by those classic 1980's US Beverly Hill's movies or that guru who promises to 'help you quit your job within 3 months and help you scale to a 6 figure business within 6 months'. Do you really believe in Gold at the end of the rainbow?! Yeah, thought so, so do(n't) I.....

With that in mind, whether you've hit the 18-month mark or 18 years into your business, you must be cautious of what is around the corner..... hmm Halloween on the 31st October, trick or treat I'm sure Brussels and Strasbourg are asking kidding amongst themselves?

Moving on from my satirical nonsense, I will discuss 4 reasons, why you should reassess your whole business model and how to fix it, today.

Just last week we saw the death of another household 'incumbent' firm.

Thomas Cook joins an ever-growing list of memorable businesses that personally contributed to facets of my childhood: JJD Sport, Woolworths, Toys'R Us, and Blockbuster.

This lad doesn't seem too fazed by the growing list of the now, deceased businesses on his CV.

But I am.

As the US Federal Reserve echoed in 2008 that no business was 'too big to fail' after no bailing out Lehman Brothers, the same is the case for Thomas Cook and their comrades.

With that in mind, each and every business on this planet needs to be cautious of failure.

Numero 1.

Pareto Principal; 80/20 Rule

In business, many companies find that 80% of revenue comes from 20% of clients, if your business is in this position, you're placing a ton of leverage on one or two clients, therefore if they default, you may also default.

Implementing strategies to diversify your client base and reducing over-reliance upon 1 or 2 key clients will offer your business more avenues and degrees of freedom.

You should be talking to at least 30 businesses at one time

This quote comes from one of the hundreds of conversations I had with my good friend Javier Tomas Borra, whilst we were studying business together. If you are banking on 'the next big contract' to come in, you're swimming against the tide. Whereas similar to traders in Canary Wharf, you're diversifying your liquidity amongst bonds, currencies, commodities, FTSE 100 & NASDAQ stocks and potentially even, cryptocurrencies (shhh)?!

Spreading your revenue across dozens of clients will allow you to become more aggressive, adaptable and agile, especially against adverse externalities one may experience throughout the year.

Numero 2.

Lack of value proposition

If you don't know what you're business offers differently to competitors, then how on earth can you expect potential buyers to?

Too often do businesses try to do everything and anything.

I had a recent meeting with a 'restaurant' owner. The owner told me he was looking to attract mature professionals, who would like a freshly cooked and nice meal with their spouse. The problem was its name ended in 'bar', had a 46" TV for the footy, took Deliveroo orders, promoted 2-4-1 offers, and the only 2 people in there, had pints at hand.

Now, the owner actively told me that their average customer would spend ￡25 per person. Imagine dining in a well-furnished restaurant with the Man United vs Arsenal on in the background, a few fans watching and Deliveroo drivers coming in and out like clockwork.

Imagine all those customers happy to spend ￡50 for a good sit down meal. If they become regulars and go every 3 weeks, then that's an estimated 17 meals a year.

17 x 50= ￡850 spent a year per couple.

An identity crisis means a business is positioned in absolutely no market segment.

To resolve this a business must be proactive in uncovering what exactly the true value proposition it brings to the table. If it does have a way to differentiate from other competitors then it must truly look to develop a sustainable competitive advantage, which is hard to replicate and impossible to imitate.

Numero 3.

SWOT Analysis.

Business Strategy 101.

One of the foundations of setting up any business comes down to a SWOT analysis. If you're reading this and thinking 'does he mean an A instead of an O', no.

SWOT stands for Strength, Weakness, Opportunity, and Threat.

Before maneuvering into any industry, it is a prudent decision for Founders or Owners to devise a business strategy and SWOT analysis.

With that in mind, I firmly believe EVERY business should conduct a SWOT analysis every 6 months. In conducting a SWOT analysis bi-annually, your business is able to watch out for short-term and long-term threats along with opportunities.

Added note, utilise Porter's EV 5 Forces in order to truly analyse and keep agile within your businesses environment:

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. The threat of substitute products

Numero 4.

Audience Targeting

No one strategy will suit all buyer segments, so businesses must develop specific strategies for each target market.

There are three main targeting strategies you can use:

1. Undifferentiated: This may be useful if your product has little competition so that you don’t need to tailor strategies for different preferences.

2. Concentrated: Here, you focus on a single segment so you can intimately understand its needs and wants. Small businesses often find that this strategy enables them to compete effectively against larger companies.

3. Multi-segment: This approach will suit you if you need to focus on two or more well-defined market segments. It offers many benefits but can be costly, owing to increases in management input, market research, and promotional strategies.

Before selecting your targeting strategy, be sure to perform a cost-benefit analysis of all available strategies.

Whenever devising a marketing strategy, I take pedantic measures to figure out how best possible we can generate the ideal buyer for the best price. With any business, you will have several types of buyers. Some will be action takers, others tentative and others outright tire kickers. Finding these people early on will enable you with picking out your 'ideal' client.

Conclusion

Business is a brutal game. From the demise of childhood brands such as Blockbuster to Toys'R Us and Thomas Cook to your local fish and chip shop.

Being agile, adaptive and strategic will provide your business with the best opportunity to survive in an ever-competitive market environment.

In addition, obtaining a consistent and predictable pipeline of prospects, understanding and observing your market and having a sound value proposition will serve as sound measures to build a sustainable and competitive business.

Keep running the no-mans-land, it ends.

If you'd like to find out how I can help your business build a predictable and consistent pipeline of leads, so your business enhances it's probability of growth then get in touch via direct message or email me at [email protected].