Without taking into account the obvious effects that the global economic downturn has had on entrepreneurialism, employment, and corporate growth, the business world is a competitive market to operate in successfully.
Remarkably, business failure statistics in Canada show that approximately 96-percent of small businesses that enter the marketplace survive for one full year, 85-percent survive for three years, and 70-percent survive for five years. The U.S. Small Business Association notes that 50-percent of all businesses fail within their first year.
There is no shortage of posts, articles, and books that offer great insight into the world of business failure and how a budding entrepreneur can hopefully sidestep the seemingly predetermined path that so many other start-ups before them have taken.
According to Statistics Canada, and many business-minded individuals, most start-ups fail because of mismanagement, in the general, financial, and marketing sense. It was also noted that almost half of the firms in Canada that go bankrupt do so primarily because of their own missteps, rather than external forces (although this assumption may not hold true during the current economic environment).
Almost every professional could hazard a guess as to why businesses crumble. There is a unique sense of simplicity when it is discussed in passing, yet companies continue to fail. There is an abstract divide between knowledge and practice in the entrepreneurial environment.
Regardless of the industry that you operate in competition is prevalent. From a capitalist perspective, competition fuels innovation, creativity, and growth. However, that same element of competition can lead companies to stumble. Take for example the current technology landscape that Apple and RIM have etched into the global market.
RIM, once poised to be a leading telecommunications and technology company has now been discussed in the same sentence as Palm. The competition between these two giants leads to remarkable technological innovations and jaw-dropping creativity. However, it has also lead to the demise of Canada’s brightest company.
What makes companies truly successfully isn’t dependent on the product or service they offer, it is about the preparedness that they bring to the market – the willingness to continue to reflect and adjust. As I mentioned, competition will always be there. What determines success and proliferation across time is the ability to remain one step ahead of your competitors.
Strategy is a type of word that misleads a lot of people. Many promote strategic planning, strategic response, and business strategy, but the definition of “strategy” is a vague collection of elements that aren’t aligned with any one enterprise. My definition, or rather outlook, on strategy is an augmentation of SWOT, an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. My adaptation comes at the end with the addition of Adjust and Communication.
“Knowing others is intelligence; knowing yourself is true wisdom. Mastering others is strength; mastering yourself is true power.” – Lao-Tzu, 604BC
It is critical for any business, especially start-ups, to recognize their strengths. Clearly identifying where you and your employees excel offers the opportunity to steer the company in the direction that not only makes sense, but also provides the greatest chance of success.
Most importantly, it allows a company to effectively utilize tangible and intangible resources that increase ROI and mitigate the chance of lost revenue opportunities.
Why at an early stage would you venture outside of your “wheel-house”? Risk has its rewards (Apple’s rise over RIM is a great example of this), but not while your business is still in its infancy.
E.g. – When pursuing new ventures, products, services, or expansion options, mapping your course of action based on your current areas of strength ensure you won’t fall victim to overexposure or taking on tasks that cannot be delivered.
“The future has several names. For the weak, it is impossible; for the fainthearted, it is unknown; but for the valiant, it is ideal.” – Victor Hugo
Weaknesses should never be feared. Nor should they be viewed as detrimental to your success. Weaknesses can only impede success if they are not readily identified and acted upon. Regardless of your position, industry, or experience, consciously viewing yourself through a realistic lens will allow you to improve in areas that, if left alone, would stifle growth.
There is this fallacious view that we hold about weakness. We see them as destabilizing elements that should be avoided rather than seeing them for what they are: opportunities for progress. A start-up is never perfect, nor is a multinational corporation. These bodies are fraught with weakness. But through honest review, weaknesses that are identified, discussed, and planned for tend to organically evolve into areas of strength.
Conversely, and not one that follows normal discussion, understanding the weaknesses of those around you, your market and competitors, yields considerable opportunities for growth and success. Seizing opportunities that present themselves occur with active research, knowledge of your industry, and highlighting gaps in the marketplace.
E.g. – A common area of weakness today amongst business is true social media engagement. By identifying this as a potential area for improvement you are able to address it pragmatically through education, strategic decisions, and possibly out-tasking (maybe even a social media policy).
This response means that you are seeking to succeed in that space. However, if you ignored the weakness and left it alone (or even worse just jumped in without understanding its power) it could in fact damage your customer service/care, brand, reputation, and even crisis response capabilities.
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill
Now that you have clearly identified the areas in which you excel, as well as your shortcomings, you are in an apt position to advance. This advancement could be internally or externally. However, any type of development in the business world relies upon opportunity and depends on your ability to seize it.
By understanding your internal capacities and your market characteristics through the aforementioned sections it is possible to strategically advance on opportunities that present themselves. Much of business, or I should say success in business, is dependent upon your company’s ability to stay ahead of your competitors.
First, identify the opportunity you are willing to pursue. This could be sales, expansion into a different market, reaching a particular demographic or audience, or generating brand awareness and loyalty.
Second, don’t blindly jump at it. Take the time to develop a detailed plan on how you will proceed. Not only should you address the strategic elements, but it is important to identify potential risks and build in contingencies. The business world isn’t perfect and growth follows the same logic. Planning for the best and the worst may be more time consuming, but it redefines how you business will react along the way.
E.g. – We’ll stick with the pursuit into the social media world. As I mentioned, don’t just jump right in. Plan how you will engage your audience, what platforms you will use, how you will field questions, inquiries, or complaints, how you will mirror you company’s brand in the digital world, and what content you will disseminate.
Also ask yourself other questions like who will you target, will you engage media or industry leaders, what are your benchmarks and objectives, how will it augment your traditional communications and PR, how will it be measured, and the like. It could be good to look into a social media policy.
At the same moment, start to think about contingency planning. At this point there are no scenarios that are too implausible. Identify areas of weakness, possible responses by your audience, elements of your company that could be targeted, how will you respond to a crisis, what if something is said off-brand, or your hashtag campaign is hijacked. Planning for the “un-expected” is vital in the digital sphere.
“Crises and deadlocks when they occur have at least this advantage; they force us to think.” – Jawaharlal Nehru
While most businesses and/or start-ups fail because of mismanagement (or internal weaknesses), there are also external factors that can impact a company’s growth and advancement. Although threats can be closely aligned with weaknesses, they can also be unpredictable occurrences that are caused by actions outside of your control.
There are numerous examples of crises that were spurred by certain threats (e.g. Komen, McDonald’s, and VikiLeaks to name a few). Many of these “crises” were caused by unique actions, reactions, or information that then triggered a set of occurrences that placed the company or organization in jeopardy (financial, reputation, growth, or brand).
Threats can take many forms and are usually unpredictable. However, it is possible, and advised, to be prepared for threats in general. Regardless of what it may consist of, it’s important to have a planned response that touches on all possible elements from communications, PR, stakeholder relations, outreach, and customer interaction.
I believe a start-up or even an established company for that matter should, before undertaking any sort of campaign or project, always be in a position to react to a threat. It’s crucial to be able to respond. Reacting defines your ability to mitigate fallout or systemic damage to your company, its brand, and its reputation.
You will not be able to predict everything that will affect your organization in the business world; however, being prepared (resources, strategy, roles) is well within your control.
E.g. – Rogers Wireless in Canada recently paid for a Twitter trend of the hashtag #Rogers1Number in promotion of their new service. Unfortunately, it was turned into an outlet for customers, past and present, to voice their displeasure with the communications giant.
The response by Rogers was, in my opinion, not the greatest, but the more concerning fact of the matter was that they didn’t foresee this happening. Threats exist in any area, field, and industry, but social media opens your company and brand up to an unassumingly critical audience.
Rogers is infamous for sub-par customer service [a weakness], which was connected with a digital community that was seeking to voice its opinion [threat]. Twitter connected the two.
The social media mishap did not hurt their bottom line or their overarching brand, however it does highlight the need to run a basic cost-benefit analysis that examines your strengths, weaknesses, threats, as well as identifying the necessary responses and resources required.
Adjust and Communicate
“The problem with communication is the illusion that it has occurred.” – George Bernard Shaw
Identifying your strengths, weaknesses, opportunities, and threats are nothing without acting on them. This is where the true strategy comes in. Everyone today loosely uses the term “strategy” for a lot of what I would call tasks. However, true strategy takes the form of adjusting a company’s trajectory while communicating in detail each SWOT element and its purpose.
As mentioned at the beginning of this article, many businesses fail because of internal mismanagement. To me, mismanagement is the inability to communicate with your company and team. The information gathered from a SWOT or cost-benefit analysis shouldn’t be viewed as confidential information because I can guarantee you that your competitors already know it. Rather view this information as a map that guides you and your start-up or business through the perils and successes of business growth.
Regardless of your product, service, or passion, success in the business world doesn’t hinge on those aspects. It is about being prepared in every regard. The same applies for other areas of our lives. Reacting to diverse and unexpected occurrences is essentially the definition of survival in life itself.