How Do You Know When It’s Time To Renew Your Business?
Business forecasting is an essential tool for any business wishing to stand the test of time, and it is especially required in the age of startups. Fortune reports that nine out of 10 startup fail – so much so that the drafting of failure postmortems has almost become a cliché. Foreseeing the success or otherwise of a business requires various actions, including the creation of qualitative and quantitative models to understand how clients will react to or demand your products of services in the long or short-term. However, forecasting should also involve knowing the stage your business is at, and knowing how to identify when it is time to change or renew key components of your business so as to devoid the stage of decline.
How Do You Know You Have Hit Maturity?
Knowing when your business has become mature and profitable is key because the next stage after this is renewal (or decline). Forbes’ marketing expert, Brandon Dempsey, states that this stage is reached when your business is growing at approximately 5% annually and your original team is now reaching the five-to-ten years of employment at your company. Mature businesses are comfortable in their sector but are also looking to expand into new ones (a key way of keeping decline at bay). You will also know you are at this stage because many key investments will already have been made.
Investments That Mark Growth
If you are still using your profits to make key investments, then you may be in the midst of the growth phase – one that is necessary before you enter maturity. In this phase, you will be investing in key items that are necessary for production or distribution. Many companies invest in vehicles as they grow, basing their vehicle decision on the experiences of other businesses and expert test-drivers. Everything from smaller cars for staff to vans to deliver goods and services may be necessary. Service industries may also need vehicles, especially if face-to-face consultations are key. Other relatively large investments for small businesses may include moving to bigger offices, hiring warehouse space, and producing considerably larger quantities of your products to meet rising demands.
Signs It Is Time To Renew
You shouldn’t wait until these signs show up before making key changes, since some signs indicate it may be too late. For instance, if revenue has been lower for almost a year, and when asked, clients claim they are interested in a newer type of product, it may be worth it to branch into the directions they identify. Think of a business model such as that of a print magazine. Print is actually making a resurgence, particularly in the luxury and tourism sectors, but if a significant percentage of a magazine’s clients are more interested in online publications, what is stopping you from making the jump to the internet? There is no reason why you cannot continue to print your publication. However, by providing beautifully designed online content, you can attract a much larger crowd – particularly millennials and other readers who have a more mobile manner of interacting with content.
Reinventing Your Company
Renewal sometimes involves little more than hiring a team of marketing professionals who can help identify new targets and suggest steps you need to take – for instance, to take your business online, employ more efficient mobile shopping systems, or jazz up your website and social media so it appeals to younger, more visual generations. P Nunes and T Breene of the Harvard Business Review report that companies that do not manage to renew themselves fail because they invest too much energy in “the contours of their existing operations,” instead of looking at more important components of growth such as tracking competition, nurturing a healthy supply of talent, and renewing capabilities. The key to success is to fix something even if it doesn’t look broken.
The stages of a business are varied yet predictable. They include starting up, growth, maturity and renewal. When it comes to the latter, the other option is decline. To avoid having to fold up or lose money on a business that has been successful for years, it is important to stay on the ball by continually forecasting demand, talking to customers to receive feedback, and keenly studying the state of the industry – and what competitors are doing at a local, national and international level.