Let’s take a look at FORESEEABLE challenges, and what to do about them.
In my last blog, I discussed the unforeseeable impact on our businesses of game-changing new technologies, such as the iPhone, Airbnb, and Facebook. This time, let’s take a look at FORESEEABLE challenges, and what to do about them. For instance: the expiration of a lease, or a nearby road construction project, or the arrival in town of a new competitor. Once we are aware of such impending changes, it is important that we take time away from the day-to-day operations of the business to plan for them.
Of course, the time to address the expiration of a lease is not the week before it happens, when the landlord appears with a demand for a big rent increase, but rather a year or more in advance. Is this an opportunity to upsize? Or downsize? Or move to a better location? Or even retire? A friend of mine bought an established Chevrolet dealership in a declining Midwestern industrial city. She had been the General Manager for several years, and when the owner was ready to retire, he gave her the opportunity to buy him out. Included in the deal was an option to buy the real estate after five years, in the meantime paying him rent every month. But the local economy was stagnant, and the automobile industry was in turmoil. My friend watched all that, and observed that other dealers, who had better locations than she did, were closing. When General Motors deserted the Oldsmobile brand, the local Oldsmobile dealer lost his franchise and closed his business, making that desirable property available. The owner was desperate to sell, so my friend, by paying attention to what was going on around her, was able to buy the Oldsmobile instead of the Chevrolet property (a better location) at a lower cost than she would have paid if she’d stayed where she was. She benefited because she was thinking ahead, and she was prepared.
To take another example, highway projects can be notorious disrupters of local businesses. Perhaps most famously, a highway project in the 1930’s to support the new Mount Rushmore tourist traffic had turned the downtown area of Wall, South Dakota into a ghost town. Cross-country traffic was booming, but it was all bypassing the downtown on the new highway a mile away, and local businesses were suffering. The enterprising owner of the local drug store, however, was not discouraged. He drove out to the new highway, erected some signs offering “Free Ice Water,” and literally before he got back to the store, there was a line of customers. The druggist and his wife, who had run the store by themselves, suddenly had to hire eight helpers! Their business was saved, and 80 years later it’s still going strong. Today, Wall Drug is one of the best-known tourist stops in the country, with as many as 20,000 customers a day in the summer. And it still offers free ice water.
In yet another example, many small retailers have been devastated by the arrival of new big-box stores. Lowe’s and The Home Depot have completely changed the retail hardware business, and thousands of local hardware stores have closed. How could they possibly compete with those huge selections, low prices, and convenient suburban locations? Fortunately for those who had the foresight to join one of the co-operatives that emerged in the 1960’s (such as True Value and Ace Hardware), help was available. The big associations were able to develop plans and education programs to teach the local stores how to react; increasing personal service, establishing repair departments, and catering to customers who wanted one or two odd screws, not a box of 100. In order to survive, those store owners had to adopt entirely new business models, but those who did so have survived, and found a whole new level of prosperity.
What these stories have in common is a willingness on the part of the owners to think differently, to step away from the day-to-day operation of the business and address foreseeable challenges that are beyond their control. They may not be able to control the existence of the challenge, but they can control their reaction to it, and by taking the time to do so, they rise above it and find new ways to be successful.
What challenges confront you, and what are you doing about them?
Read more of Alec’s thoughts on successfully running a small business here.
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