With the only constant in today’s small-business world being perpetual change, it’s those entrepreneurs who anticipate and adapt to change who are most successful. But it’s not just about creating a few new products or services now and then.
“Those small-business owners who continuously innovate and reinvent themselves are the ones who experience long-term success,” says Lloyd Shefsky, clinical professor of entrepreneurship at the Kellogg School of Management at Northwestern University and author of Invent, Reinvent, Thrive: The Keys to Success for Any Start-Up, Entrepreneur or Family Business. “If you aren’t ready, willing and able to reinvent, you’re doomed.”
Shefsky’s book shares startup stories of various companies, including Stapes, Starbucks and Costco, and how the founders of all these companies experienced the need to reinvent from the get-go.
Change at the Speed of Light
Thanks to a global economy and the perpetual changes in technology, the ever-evolving small-business environment shows no signs of slowing down. “Change is faster and more frequent than ever before," Shefsky says, "and your competitors have fewer barriers to advancement than at any time in history."
All industries continue to evolve over time, adds Vinay Tannan, Ph.D., a U.S. patent agent and owner of Taan Consulting. “Small businesses and startups often need to pivot in order to stay at the forefront of their industries," he says. "A friend of mine at an investment group once told me that most of the startups they funded had a transformed business model 12 months after funding and, in many cases, had a completely different product. Reinventing is a common and necessary practice to be successful.”
For many entrepreneurs, one of the biggest challenges to growth and remaining viable is a resistance to change. “When you’re too in love with your product or plan, you lose the ability to make objective decisions, which can spell disaster,” Tannan says.
Consider corner newsstands, Shefsky explains. “Those that didn’t change and reinvent themselves as coffee, quick snacks or frozen yogurt kiosks died," he says. "Being open to change is critical to success. Even after you’ve spent enormous time and energy selling people on your dream and vision, you must tell your investors and early employees who bought into that dream and vision that you changed your mind. For instance, when Thomas Stemberg opened Staples, he initially said there was no need to deliver office supplies, until copycats began offering delivery just months after Staples began.”
Steps to Reinvention
But how do you know when it's time to change—or die? The following big-picture steps for reinvention will help you know how and when you should make changes to your small-business plan.
1. Do your homework. The data that can indicate it’s time to make a change is readily available, suggests Tannan, who works with his clients to put in place an infrastructure for business intelligence and data analytics. “With monthly and quarterly reporting, we regularly uncover new insights that inform everything from marketing strategy to new product development to future investment decisions," he says. "Most of the time, these are small adjustments or realignments, but in some cases, it's led to total reinvention of the business.”
2. Look for the signs. Once you’ve collected your data, strong indicators that it’s time to make some changes include customer feedback that says your product isn't right, sales numbers that show your target market isn't optimal and projections indicating that your current business approach isn't sustainable.
3. Focus on what matters. Being able to objectively study and accept the data and make changes is the key to a successful business model. It’s all about focus but not wearing blinders, Shefsky suggests. "You want to see new opportunities and challenges," he explains, "but you don’t have to see around corners or through walls. You simply have to read the writing on the walls of the field you're in.”
4. Be prepared for the inevitable. Have a program in mind from day one for reinventing, Shefsky suggests. “Know and inform your team and consider their capabilities and weaknesses in the areas of change. Also plan how you’ll find new talent or train existing employees when things change," he says. "And know how you’ll prepare investors for the possibility or likelihood that reinvention will become necessary, so it’s not a shock to them. Also prepare yourself financially and emotionally.”
Words of Caution
While some change can be good, turning things upside down just for the sake of change isn't recommended. “Reinventing should be well informed by business intelligence like market research, customer feedback and financial projections,” Tannan says. “Keep in mind that reinventing too frequently or in too great a magnitude may be a negative. Frequent and major changes could lead to customer confusion, as well as internal confusion if your team no longer understands the ultimate vision of the company.”
No matter what changes you make, be sure to always protect the soul of your business and the passion that got you started in the first place.
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