Article provided by The Alternative Board
In so-called ordinary times, many businesses experienced the need to reinvent themselves to meet changing customer demands. Today, months into the COVID-19 outbreak, the “reinvention challenge” is more pressing than ever.
Leaving aside the enormous hurdles presented by our current situation, businesses often encounter other conditions demanding that business owners contemplate reinvention. Such conditions include:
- Products or goods that have lost customer appeal.
- A new or established competitor’s entry into the market.
- Advances in technology render current offerings irrelevant.
Whatever the situation, business owners should at least have a reinvention plan in mind. Here are tips to help formulate a plan for this contingency.
Assess what your competitors are up to
The actions of your competitors can indicate it’s time to reinvent. As we have noted elsewhere, monitoring competitor activities can include:
- Looking for changes in their websites or even a complete redesign.
- Paying attention to messages they emphasize on social media.
- Evaluating the appeal of the content (articles, case studies, etc.) they are promoting.
- Always taking in the “big picture” through a customer’s perspective.
Also, where possible, try to determine if their sales are outperforming yours and, if so, what are the underlying causes.
Conduct a no-holds-barred brainstorming session
Unless you’ve already had a revelation concerning what your reinvented business might look like, now is the time to gather your most trusted and imaginative team members to take on this task. Brainstorm ideas around the present-day challenges your business faces, challenges yet to come, ways in which your products or services can be redefined, even what a totally new business model might look like.
Remember, in a brainstorming session, there are no bad ideas. You never know what the “a-ha” moment might look like.
Throw caution to the wind
In the earliest stages, there’s little risk in proposing bold new ideas centring around reinvention. When such ideas emerge, test their viability through a customer survey or by bouncing the idea off of trusted advisors. “You’ll most likely also have to alter your messaging to ensure the new direction will keep the reputation of your business intact”, notes We Heart Entrepreneurs, adding that “it’s vital to get a positive rise out of your public and out of your potential customers.”
Focus on differentiation
There’s little point to reinventing a business if it’s not going to be dramatically different from (a) what you had before and (b) what’s already out there in the marketplace.
Remember, a clearly defined unique selling proposition always answers a customer’s most pressing question: “Why should I do business with you instead of one of your many competitors?”
Managers Resource Network suggests the following differentiating factors to prioritize in your reinvention strategy:
- Having quicker, and more efficient customer service.
- Having a higher-level customer buying experience.
- Having a wider array of product options.
- Generating a higher volume of sales at reduced prices.
Any plan to reinvent a business must identify ways in which you can differentiate that new offering.
Don’t discard the things that already work.
Reinvention doesn’t mean tossing out an entire business model. If certain processes and systems work well, they can likely be adapted to the new undertaking. Other tips include:
- Maintaining functions and operations that are still viable.
- Improving communications with constituencies who are inclined to support a new endeavour.
- Pinpointing areas where cost-cutting makes the most sense.
Any reinvention still needs a strong foundation to succeed. At least some of the factors that have generated past successes can be retained in your ambitious move forward.
Own your budget and cash flow forecast
Many business owners don’t own their finances. They don’t know how much money is in the bank, how much is due to them, how much still needs to be paid by them, and what their margins are.
Someone recently said that a budget is a policy statement about what you want to achieve.
A budget is also only a snapshot at a specific point in time of what you as the business owner believe is possible, given the information you have at that time. Anything after that is dependent on measurement against the original budget, and cash flow forecasting.
A budget is what you had planned for. Cash flow forecasting shows you, given the reality – past/Year To Date + current + future– what is now possible. And “now” is at least every month.
Without a budget and cash flow forecasting, business owners have no idea of the impact of their decisions on their profits and profitability.
No material decision should ever be made without testing its impact against budget and cash flow forecasting. And to know if that decision is material – test it in your cash flow forecasting, and see its potential impact down the line.
Take for example our recent supplementary budget speech by Minister Tito Mboweni. In February a budget was presented and accepted. Because of COVID-19 and its impact on our reality, that original budget had to be reviewed, against cash flow forecasting. And as a result, an adapted budget had to be presented.
This is no different to what a business owner should be doing when circumstances change fundamentally, as has been the recent case.
As noted, input from others on your reinvention plan is essential. After all, “No individual has sufficient experience, education, native ability and knowledge to ensure the accumulation of a great fortune, without the cooperation of other people” – “Think and Grow Rich”, Napoleon Hill.
All business owners want to believe that they know best. We don’t.