Bob Dylan once summarized the state of affairs with “The Times They Are a-Changin’.” and that couldn’t be more true when speaking to what’s on the horizon for Northern Nevada. Currently the area finds itself at an interesting cross road and that intersection is a bit of a contradiction relative to both professional maturity and a forward thinking vision when it comes to merging with the rapidly changing business climate which awaits it.
On one hand the business community prides itself on the historic allowances a small town has to offer over that of larger markets by way of simplicity, long standing relationships, limited competition, as well as a slower pace and alike. To date these elements have granted businesses the luxury of being able to figure things out “on the fly” and the margin of error relative to both business strategy and operational execution has been vast and nearly unchecked. In fairness, it hasn’t had to be; until now.
“A major decision point is upon us.”
From entrepreneurial start-ups through medium sized businesses, specifically those falling within the parameters of newly formed up to five years of age, the statistics aren’t favorable. As an example, in “The E Myth Revisited”, Michael Gerber states that,
“At the end of the 1st year, 40% of new businesses will be out of business and within 5 years more than 80% will follow. Of the companies that survive the first 5 years, 80% of them won’t survive the second 5 years.”
Beyond the data behind failure rates are the primary categories which lead to the them in the first place, as well as continued over time due to lack of adaptation. Although the list is somewhat long, the least common denominators which would constitute a short list would fall under the following:
1) The inability to differentiate between being a subject matter expert and running a business.
2) Lack of a clear and documented business and execution plan to include a vision and related milestones.
3) Attempting to ramp too quickly without a scalability plan.
4) Failure to recognized the impact of external influences.
5) The inability to flawlessly execute on the fundamentals from the perspective of the customer.
A pitfall which many become victim to is the failure to recognize the difference between being passionate and/or the subject matter expert on the goods or services provided vs. that of running the business relative to those goods or services. For example’s sake, just because one likes to bake doesn’t mean they have the skillset to own and run a bakery. Further, and even if the quality of the goods or services is beyond compare, the majority of businesses stop short at their vision and fail to offer a compelling argument for people to change from their current solutions in reference to their market strategy. This is what’s known as disruption distribution or a unique selling proposition (USP). Although people might like the taste of the cake in this example, sampling it once to try it out is far different than being a repeat customer who is willing to leave their current provider.
Further, there is a general failure to adequately envision, plan for, and articulate the vision in the documented form which is easy to understand and follow across the organization. The Harvard Business Review states that up to 70% of employees are either unaware of their company’s business plan and/or do not understand their company’s strategy. Thus they do not make the link between their work and the vision, priorities, and goals of the company. In fact, over 90% of small business start-ups have no documented plan of any kind and feel that they will magically beat the odds which statistics have proven correct time, and time again.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain
Business plans, particularly for new businesses are typically put together in haste, are limited in scope and are generally focused on the minimal requirements directed at financial institutions and private investors for the sole purpose of funding. Once moneys are secured, said plans tend to be shelved to collect dust and initial strategies fall by the way side, soon to be replaced with what one might call “flying by the seat of your pants” behaviors from management downward and throughout the employee base. Bad habits are quickly created which are rarely based on sound business fundamentals and thus many, if not most, businesses fall victim to said statistics.
Beyond that of a business plan, many fail to extract and build upon the financial modeling therein, let alone put in place a robust operating plan from which to execute their daily business. These areas are not only integrated, but need to remain fluid and play upon each other rather than be a one-time thing. Realistically, and especially true for new businesses, these items are more for internal use over that of external and should be thought of as a “back pocket confidence builder” of sorts in that they reinforce the need to know the end to end business in great detail. Know it well and validate your knowledge of the behind the scenes details and intricacies. Conversely, the inability to do so will expose weakness and allow for questioning of related abilities. After all, smart money won’t invest without a sound end to end plan and said plans need to show a realistic, sustainable progression over time to include a long term projected value statement. Stated another way, there is not a shortcut to the fundamentals of a sound business, financial, and operating plan.
A commonality across both new vs. established businesses, is that of the aforementioned shortcuts. An obvious trend is that of businesses not doing the due diligence on the foundational cornerstones of success and skipping ahead to what can be perceived as the sexier elements or operations and the almighty allure of dollar signs on the short term horizon. They see the $ but don’t have a plan to get there. This is the proverbial “hockey stick” growth model wherein they wish to accelerate quickly with little or no sustainability in mind. Continually heard are the terms branding, marketing plans and the inevitable social media barrage being thrown into the conversation, however people are putting far too great an emphasis on these areas, especially in the social media space. Yes, they have their place, but again, if the basics are lacking, the results will still be unfavorable and inevitable.
Although much of the above is primarily focused on the new business owner, there is a paralleling strategy for existing businesses which can’t be overlooked. For many local businesses who have weathered the initial storm and have stayed afloat for greater than 3-5 years, most, if asked the same questions relative to the strength of their business, financial, and operating plans, the answers would be generally the same; that they either don’t have one and/or it hasn’t been updated since being initially authored. Adaptation is the key here and one cannot underestimate the need to continue to recognize the impact of external influences, especially when not obvious. This means doing research and staying ahead of the market trends by way of implementing and aligning to a few key performance indicators (KPIs).
The U.S. Small Business Administration recently published that most business failures are caused by a combination of operating and financial factors, often influenced by prolonged economic conditions that impact demand for certain products and services. Thus, know your business, own your business and adapt your business to meet the variable market forces. There is a quote which states, “Standing still does not constitute forward motion and therefore one must either adapt or die.” There is a lot of truth to that statement and it needs to be understood and internalized by many if they wish to remain relevant in the changing business climate.
Further, and by way of the adage “Actions speak louder than words.”, one cannot underestimate the importance of the customer experience and flawless execution therein. This is a particular area in which Northern Nevada, (and I use a broad brush here), needs to substantially up its game. Beyond that of merely service industry based businesses, the lack of professionalism across the operational execution cycle continues to astound. Again, people are putting far too great an emphasis on their electronic and social footprint and fail to execute on the basics of customer engagement.
- Voicemail messages without a personalized greeting and only a synthesized iteration of the number dialed.
- A full voicemail box without an opportunity to leave a message.
- Failure to get back to people in a reasonable time. 72 hours is not reasonable.
- Failure to set expectations appropriately, validate and update expectations should/as things change.
- No scheduling of meetings by way of calendar invites.
- Not showing up on time or, heaven forbid, not showing up at all.
- Not following up with a summary of items discussed.
- Not executing effectively when clarity has been sufficiently given on expected deliverables.
- Dressing unprofessionally within a professional environment.
The lackadaisical and overly casual society in which we live does not translate to successful business practices and, like it or not, both impressions and the fundamentals still matter and are the measures from which you will be judged. After all, your business is a direct reflection of you and, as it is your business, it’s yours to own; meaning all aspects of it to include the negative consequences of your actions (or lack thereof). If you approach your business disorganized, your business will be viewed as disorganized. If you don’t make your customer base your number one priority, your customers will feel deprioritized and thus will look for a better option from which to be served. Further, excuses given as to why something happened only reiterate a failure to execute effectively in the first place. The fundamentals of customer engagement can be thought of as the starting line of the experience you offer and are judged by. If you don’t execution against them appropriately, this can be looked at as a false start from which, not only you won’t succeed over time, but your competition will leave you behind as they sprint ahead to claim more of your potential market share.
So why does this matter? As initially stated, Northern Nevada finds itself at an interesting cross road and that intersection is a bit of a contradiction relative to both business maturity and future direction when it comes to a rapidly changing climate which awaits it. Simply said, sound and fundamental business practices matter because they are the cornerstone of success and there is a wealth of data to support this fact. Failure to recognize this is a failure in and of itself. Thus, local businesses will no longer be afforded the luxury to execute based on a handshake and notes on the back of a napkin. More of the same will no longer be “good enough” as the bar of professional expectation gets raised at a pace which is soon to be unprecedented in comparison to what’s taken place in the past. As this is better understood one must then verse themselves on the two primary factors driving the need for continued adaptation to market forces. In an over simplification, these are twofold. 1) External demands shaping our local economic development and 2) a related shift to the competitive landscape itself.
When speaking further to the external demands shaping our local economic development, the realization must be internalized that the first domino in a long series to come has long since fallen and adaptation to meet the evolving need for nothing short of flawless execution is no longer an option. From Tesla, to Switch, to Flirtey, to Clear Capital, and other fortune 500 companies, Western Nevada provides a compelling environment from which to establish a footprint. As expansion accelerates, companies solidifying their localized strategies and related workforce solutions will continue to weigh the tradeoffs and related decision points relative to where to source goods, services, and workforce options. Their question? Bring supportive infrastructure with them from outside markets or tap into local, yet unknown options?
Although the desired demographic need has, when speaking of local options, substantially matured over the last decade, it is not necessarily keeping pace with the ask and many businesses will find themselves at a disadvantage to serve the increasingly competitive need.
This leads to the secondary, yet equally important point of a related shift to a heightened competitive landscape. I recently overheard the following.
“More and more people and businesses are moving here from big cities and they bring with them high expectations. So the smaller, local businesses have a lot of pressure to satisfy these new customers and will either grow to meet the need or go out of business.”
Thus, as external forces infiltrate the local economy, the competitive demands will also force adaptation. Meaning as corporate footprints grow and supportive infrastructures muddy the water via external options vs. that of what’s historically been a locally owned base only, the competitive advantage will fall to the players who are ahead of the curve by way of vision, structural foundations and proven strength through operational excellence.
Does this go beyond that of direct, industry specific, competition? Absolutely. It seems the local community has a desire for Northern Nevada to grow up and morph into a demographic that has elements of larger markets which are vibrant, more cutting edge, and have desirable aspects which can be leveraged from the likes of the San Francisco bay area, Portland, Seattle, and others; the best of this, and the best of that if you will. Unfortunately, and as the area makes slow yet steady progress in that direction, the business community won’t have the luxury to pick and choose only the best elements within the transformation.
There is a nonnegotiable truth which states that the relative talent on the playing field will continue to grow and therefore said playing field will not be equal for all wishing to play. Expectations from both companies looking to source locally as well as from a customer perspective will ever increase and competition will be based on a least common denominator whose evolution will trend progressively upward. Thus, direct competition by way of the past is an ever shrinking piece of the growing whole. Strategies need to be reshaped to meet current and future needs as the expected level of excellence and related trajectory shifts upward.
Change is inevitable and it’s how you react and adapt to it that will determine if you remain both relevant and competitive. At Dogma Consulting, we deconstruct the chaos and embrace the possibilities in order to significantly increase your probability of success.