The first in a series of posts about stalled business growth and what can you do about it.
Everything seems to be moving along nicely until one day, you stop growing. Like a car at traffic lights, business growth has stalled.
Do you even need to care?
Well, yeah. In business, if you’re standing still, you’re falling behind, dying the death of a thousand cuts. And that ain’t good.
So, what happened?
How can it be that you are working your butt off but getting nowhere fast? How can it be that the stuff that used to work, just isn’t working anymore?
The first thing to note is that stalled growth is a symptom of something. That something may exist within your business, or external to it.
The second thing to note is that this is a ‘dragon’ you may have to slay more than once – if you are in business long enough, you are likely to experience a number of stall points, each with different causes. At least you’re in good company!
Whichever way, if you can identify the cause, you can take steps to deal with it. And it’s this very issue – that of stalled growth – that we’re frequently called upon to help identify and correct.
Over the coming weeks, we’ll explore the most common reasons for a stall. Today, we’ll briefly touch on external factors, then review internal factors over the following weeks.
When we talk about external factors, we are talking about things that are happening around you. By their very nature, they are not things that you can control. Nonetheless, they are things you should be aware of and reactive to.
The most obvious of these should have been picked up in your situational analyses. (Read up on SWOT analysis and PEST analysis). Though, in reality, it’s difficult to predict the future and with the world changing so rapidly, there may well factors weighing on your business that you didn’t see coming.
Have market conditions stalled your business growth?
Local and international market conditions can have a major impact on your business. Keep an eye on key economic indicators that impact or are reflective of market conditions in your industry. This might include inflation numbers, employment and wage growth, production (GDP), commodity prices, consumer confidence, and retail and trade sales figures.
What can we infer from those key economic indicators? Are they improving or deteriorating?
Regardless of whether you’re a B2B or B2C, repeated negative changes (or the mere absence of positive changes) in economic indicators are likely to erode consumer and business sentiment and we know that sentiment drives behaviour as much as rational thought.
Businesses and consumers tend to tighten their belts in a weakening economy, which may lead to a decrease in demand (i.e. fewer sales). As suppliers chase customers further down the demand curve, they can be tempted to drop prices. Reduced demand and/or reduced prices equals your first profit warning.
International conditions (such as trade wars or political instability in a given region – good luck selling travel packages to Hong Kong right now) can also flow through to Australian market conditions.
Changing international conditions can directly affect supply and demand of materials, labour and other services, and also affect exchange rates. This in turn can drive up the price of foreign-sourced materials and services, impacting on your costs, your ability to meet demand, and your competitiveness.
Regulatory changes can also have significant impacts on your business.
The introduction of safety regulations, manufacturing or packaging regulations, changes in tax treatment, or data privacy legislation all have potential to throw a curve-ball at your sales or even threaten the viability of your business model. It wasn’t that long ago that a proposed change in the FBT laws saw salary-packaged motor vehicles become far less attractive – a big issue if you are in the vehicle leasing game.
Your industry association and/or professional body can help you to keep abreast of and even have input into, potential regulatory changes in your industry. This will better assist you to prepare for the changes prior to the change in regulations.
The entry of new competitors through foreign entry into the Australian market or through disruption or technology, has the potential to seriously impact your business. As does the morphing of business models.
Consider the impact of online shopping, which has eroded the viability of many small retailers; or the entry of ride-sharing apps such as Uber, which has shaken the taxi industry to its core. The obsolescence of video stores, replaced by online streaming services, highlights the importance of proactively identifying and mitigating changes in your business’ competitive landscape.
While you can’t stop the entry of new competitors into your industry and you can’t dictate the product or service your competitors offer to the market, you do need to continually scan the competitive landscape, both locally and internationally, to maintain awareness of competitors and identify opportunities to innovate and compete in the changing market.
And what of social trends? The now famous smashed avocado must have wiped millions of dollars off Vegemite sales! Maybe your growth has stalled because people’s preferences are changing.
As a business owner, it can be challenging to find the time and the ‘headspace’ to rise above the day-to-day issues, to proactively identify changes in external factors that are likely to impact on your business. Especially as there are so many competing demands for your time, energy and resources.
If you have a coach or mentor, or better still, an Advisory Board. They can assist you to take a “helicopter” view of your landscape and to maintain a regular discipline of scanning of your business’ environment.
If you’d like our assistance to get your business growing again, please contact BridgePoint Group on 1300 656 141.