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How can you be sure your business will be alive 5 years from now, when the statistics are stacked against you?
“But I’ve passed the initial hurdles,” you may say. “My business is already pulling in healthy revenue.”
Sorry to say it, but one of the most vulnerable places you can be in with business, is a place where you’re doing well.
Even worse if you’ve been doing well for a long time, without much change.
The most at-risk entrepreneurs aren’t the ones first starting out, nor is it the ones dominating their spaces at the moment – it’s the ones somewhere in between.
Companies who are not aware of that fact are in trouble, and will only suffer greater losses as time goes on. In this article, we’re going to poke at some of your businesses’ vulnerabilities, and discuss strategies you can begin implementing to future-proof your business today, so you can survive the rapidly changing world in the future.
Why Established Companies Are Most At-Risk
Let’s take a typical small business as an example. If you are a one-person operation, such as a blogger that is living off your blogging income, the same principals apply (just substitute the examples for those that fit your lifestyle.)
A typical business may have quite a number of recurring expenses:
- Rent for their location
- Software licenses
- A reserve of inventories
- Employee salaries
And so on. They are required to pay these expenses on a recurring basis, or else their business will not be able to operate. They have grown to a level where without one or more of these recurring expenses, their business will suffer great losses in revenue and / or profitability.
In addition, once you’ve reached this size, you’ve likely become ‘set in your ways’ a bit. You’ve created and deployed processes and systems to improve efficiency, and rightly so. Things seem to be going well, and on average, revenues tend to grow over time if the business is well managed.
Herein lies the problem. In my financial independence course, which covers many aspects of personal finance, I discuss something called lifestyle creep. This is the tendency to immediately take on new liabilities because you have the money to spare.
In your personal life, it may be things like a larger mortgage, a car payment, or subscriptions you don’t really benefit from.
In business, it can be similar – a larger office than you need, outsourcing things you could have done yourself, fancier equipment, etc.
The problem is, when anything about your current revenue situation changes – a new competitor enters the market, your biggest client drops out, an entire market shift due to technological advancement, a worsening economy, etc. – you’ve put yourself in a very difficult position.
Change is coming that’s beyond any of our control – and it’s going to come quicker than you think. Therefore, you need to start thinking about how to adapt right now.
The Changing World
A Historical Look
You only need to look back at the last 20 years to see how failure to adapt to the changing world has sent major companies tumbling to the ground.
Blockbuster. Sears. Toys R’ Us. Kmart. Kodak.
Blockbuster failed to embrace streaming because they thought it would hurt rental sales, just as Kodak passed on digital photography in hopes to remain selling film.
Sears, Kmart, and Toys R’ Us died because they underestimated what the internet would turn out to be, and failed to adapt as consumers buying habits changed. (Ironically, Toys R’ Us ended up working with Amazon to handle their eCommerce at one point.)
These were massive companies that could afford to lose hundreds of millions or billions of dollars if they screwed up, and they still all fell.
Where does that leave you?
Change Will Accelerate
The world has clearly changed a lot in the last 20 years, and even moreso in the last 10. We live in a world dominated by the internet, and people are spending more and more time behind screens – especially mobile ones.
The thing about technology is that it tends to develop exponentially, not linearly. This means that technological change is going to accelerate, rather than continue growing at the same pace.
Along with the growth of technology, our lifestyles will change at a quicker pace as well.
To point out a few examples…
- As the technology improves, people will spend more of their time in virtual reality environments.
- Chatbots will actually reach a level that mimics humans, and people will spend an increasingly larger amount of time interacting with these chatbots.
- Artificial intelligence will transform entire industries in ways we can’t even imagine.
- 3D printers will make their way into the average person’s home, preventing the need to purchase certain products. This makes the value of the product become the design schematic the consumer would purchase to download.
- People will continue spending more of their lives on the internet.
It seems crazy, but I’m willing to bet at the turn of the millennium, the idea of going out and seeing everyone starting at a tiny phone, that could do literally thousands of different things for you, would have also seemed crazy.
Even assuming none of these will affect you in any way (they all do, even just indirectly) – there are companies like Amazon out there wanting to destroy everything. Literally, collecting insane amounts of data on every consumer product their third-party sellers offer, picking the best products one at a time, and manufacturing it themselves – cutting everyone else out in the process.
This is only one small example – there are plenty of others, such as Amazon operating at losses until their competitors go bankrupt, or forcing businesses to become reliant on them, then threatening to crush them unless they agree with their terms.
It goes on, and on, and on.
The point is this – there are factors that are outside of your control, and one day you will be faced with them. Therefore, you need to prepare now. Future-proofing your business does not have to be difficult, but you have to be conscious of what’s coming.
Let’s discuss some strategies.
8 Things You Must Do Now, To Future-Proof Your Company
1. Decrease Reliance On Any One Thing
I put this first because it’s perhaps the most important.
Any time you are dependent on one single thing for your business to survive, you are in trouble.
This could be one revenue source, one client, one company, one person, etc.
When you are dependent on one thing for your business to run, you are always at its mercy.
Your biggest client could drop you. The company can decide it doesn’t want to work with you anymore. Your one revenue source could dry up due to a new competitor, a product flaw, technological shifts, and so on.
Then what? You’re out of options, and in some cases, immediately out of business.
This is one of the many reasons building a business around Google Adsense, Udemy, Amazon (and whatever trends next) is probably a poor decision.
These programs can drop you whenever they’d like, and you have no recourse.
While you should never abandon your main source of income, you are in a much safer place if you have income flowing in from multiple sources. At least then, if one of them is damaged, temporarily or permanently, you have something else that you can use to rebuild.
That being said, it’s not just revenue that’s an issue here. You should’t be dependent on any one thing, for any area of your business.
For example, a lot of small brands are likely going to go under in the next 2 years, because they built their companies entirely around Instagram, failed to build an audience elsewhere, and depend on organic reach to drive revenue.
And as organic reach on Instagram drops (it’s already happening) – so will their businesses. Sorry Instagram ‘influencers’, your days are numbered.
2. Build A Strong Brand, Powered By Experiences
As the world grows, technology advances, and more players enter the market, more and more products are becoming commoditized.
The best way to survive commoditization of your products is to build a strong brand that does an exceptional job getting front of and connecting with your target consumers.
You will need people to seek you out specifically, even if it means that they have to go out of their way, or pay a higher price.
We already know people buy heavily based on brand today – even if comparing between two identical products.
You’d be surprised that both the brand names for consumer goods, as well as the cheap generic brands, are often both made from the same exact factory, and often with the same exact materials.
Yet, people happily pay significantly more money for the brand name, because they know, like, and trust it.
Things will be even better if strong customer experiences are a core part of your branding strategy, as this is much more difficult to replicate, and provides further room for differentiation.
3. Attention Is Everything
Every day, our attention is spread further and further out, as more companies and services enter into our lives.
Consumers’ attention at whole is limited – there will only be 24 hours in a day. This means that more and more people are competing for a slice of that same pie.
In the future, having this attention will become even more valuable. Attention of your target consumer is the ultimate asset, because it allows you to direct it wherever you want to – regardless of what’s going on in the world.
This is why I place so much importance on branding and having a strong content marketing strategy. Paid marketing will get more expensive as time goes on, and you’re at a huge advantage if you have people willingly seeking you out for free.
The fact that attention is so timeless is also part of the reason why I started this site – I’m not sure what companies I will choose to run in the future, but I know that if I can build an engaged, interested audience here, I’ll be at a huge advantage whenever I launch them.
4. Collect Large Amounts Of Data
If you don’t have proper data collection systems in place, now is the time to begin implementing them.
Not only will having all of your data at your disposal allow you to make better decisions now, but it will allow you to see when things are moving in a different direction, and prepare accordingly.
Even without complex systems in place to track how people are interacting with your business and the market in general, you can still collect data on a smaller scale by building genuine relationships with your customers, and consumers in your target market.
This means sending out personalized emails, interacting with potential customers on social media, and actually talking with them – learning more about what they actually care about, what their lives are like, and how you can best serve them.
This is especially important if you are not an active consumer in your business’ space.
Still, begin collecting data now, even if you feel you don’t have an immediate use for it. You never know how you’ll benefit from it for the future. Which brings me to my next point…
5. Build Things With The Future In Mind
We’ve already established that things will be drastically different in the future. This means you should begin doing things today, that make taking advantage of the changes easier.
Going back to the data example, I began collecting large amounts of market data on parenting products for my baby product company in early 2018. This was shortly after the Cambridge Analytica scandal occurred, and I wondered if the U.S. government would impose stricter laws on data scraping.
My company collected billions of data points, from just about every legal source we could find.
Now let me say, I have very little that I can do with this right now, especially as I don’t have any data scientists on my team at the moment.
However, in the future, running analysis on this data could be trivial, something the average person could do with ease. And because I have so much of it, I have the ability to zoom in really far, and monitor actions and psychographics of very specific things, as well as noting how these have changed over time.
If I waited until then to begin collecting data, who’s to say scraping at this scale is still legal, as digital privacy concerns grow?
A Different Example
Last year I really delve deeper into computer programming, and I learned an important concept:
Things change over time, especially when relying on external factors. Therefore, you should build your software in a way that allows you to make changes to one part of it easily, without having to destroy it and rewrite it from scratch every time something changes.
I learned that from experience, as that’s what exactly what I had to do – several times.
Businesses should build their systems in a similar way.
If you have to spend massive amounts of time or money restructuring things when something small changes, you’re going to have a much harder time. It’s so much more worth it to build things with great sustainability from the get-go.
6. The Workforce Is Changing
As an employer, it’s important to understand that a larger percentage of your workforce will consist of younger generations – generations you may not be inherently in touch with.
These generations have different values, priorities, and goals when it comes to their work.
You do not need to align yourself with these same groups of people, but you should recognize that they see things differently – and adjust your organization as necessary to accommodate it.
Children today are living a radically different life than children were just 10 years ago, and as the world accelerates with its change, the employees the world produces will also change much more quickly as well.
7. Be Willing To Pivot
A lot of things we’ve discussed so far ultimately point to this – you need to be willing to pivot, even if it means jeopardizing short-term profits.
This is made a lot easier by following the rest of advice in this article. If you aren’t dependent on any one thing, than you can make adjustments and still get by just fine. If you have a strong brand, and positive attention from your target market, you’ll never be starting again from zero, and you can always tap into that. If you collect large amounts of data, you’ll know the right time to pivot, and what pivot you might take.
The major corporations mentioned earlier – Blockbuster, Sears, Toys R’ Us, Kmart, and Kodak, may still be alive today if they were just willing to pivot when change approached.
Instead, they were unwilling to sacrifice any of their current profit in the short-term, and ended up paying the ultimate price.
Pivoting is hard, because it means giving up something we worked so hard to build. But, this is the reality of business. One of the most dangerous things you can tell yourself is, ‘we’ve always done it this way!’ as you slowly but surely approach your downfall.
8. Invest In Courses From Quality Instructors
As business people, we all know the importance of continuously investing in our education.
The problem today is information becomes out-of-date so quickly, you may not realize you’re learning from a resource that’s no longer correct.
This is why top entrepreneurs these days are opt-ing to invest in high-quality courses, rather than traditional books or programs. A good course is always up-to-date, and is added onto over time as new information comes out.
If digital marketing is a priority for your business, I highly recommend checking out the video courses I have to offer by clicking here. Currently, I offer courses on the topics of blogging, email marketing, and building a successful mindset. I also offer courses on Kindle Publishing and achieving financial independence, but these are a little more niche and may not be applicable to all entrepreneurs.
All courses are constantly kept up to date, and they come with an instructor who is always on your side. Whenever you have a question about anything regarding one of the course topics, I am available to help you every day of the week.
Needless to say, it will prove to be a valuable investment for your business and for your entrepreneurial growth, especially as time goes on.
Simply by the fact that you’re conscious of what’s coming, are you able to take better steps to adapt to it.
A business is no longer something you can build a set of systems for, and then forget about. You’ve got to be constantly looking at what’s ahead, and begin making adjustments in advance to adapt if you want to succeed for long.
It can be hard, even painful to move away from things that have worked well for you for so long, but as entrepreneurs we have to be willing to continually make new sacrifices if we want the best for our companies.
By implementing the 8 things in this article, you’ve got yourself a great strategy to secure your business against upcoming changes in your industry, and truly give it the future-proofing it needs.
Any questions? I’d love to chat more with you about this topic in the comments section.
– James McAllister
Review the main points of this article in the SlideShare below. Feel free to embed this on your site, use it in your organization, and share it with others! All I ask is that you give credit! (Download links are available from SlideShare’s website, which you can access by clicking the LinkedIn icon)