Every product or service that an entrepreneur markets has a shelf life. While some categories or fields may be relevant for years, others eventually do replace them. Some enterprising trailblazers who are quickly gaining attention are challenging even the funeral business that really hasn’t changed for centuries.
One way to deal with a drop in demand is to boost awareness efforts in order to persuade customers or clients that the concept, products or services still have merit. That’s what Starbucks is currently attempting to do to protect its business to name a publicized example.
The other way is to adapt to the demand shift and offer new concepts, products or services that fulfill the direction of the change. It’s a clear understanding that tomorrow’s opportunities must be acted on now and today’s dwindling business must be bailed on. Toyota’s move to turn its SUV production facilities into Hybrids’ is a bold admission that the former segment is passé and that the latter is the future.
When faced with such a situation, what’s an entrepreneur to do?
The first aspect is to put on the objectivity hat. For instance SUV makers and airlines companies know that the fuel problem is here to stay for a long time until things get better. That’s the reality that’s allowing them to shift the direction of their businesses.
The second aspect is to establish whether the change in attitude (hence in demand) is temporary or permanent. Starbucks problem is not that premium coffee is out of style. Its problem is that it tarnished its image while pursuing other interests to grow and leverage its brand name.
On the other hand, SUV manufacturers problem seems to be permanent because first these types of automobiles went out of style and two, the high petrol prices pooped on the party big time.
If the drop in demand is temporary, the alert entrepreneur should adopt survival tactics and hang in until sunshine follows rain. If the drop is permanent, the wise entrepreneur should seek opportunities in tomorrow’s categories or fields.
The third aspect is to be proactive. Demand shifts do not happen overnight in most businesses. The exception that comes to mind is fashion, which is why I always advocate against using “fashionable” as a unique selling proposition and rather use it as publicity tactic.
It’s like climate change, most of us are acting fast (or slow) enough because we know that in over ten years, the planet will be in a worst state than today’s if no action is taken.
Entrepreneurs should take action too when they sense the changes. And no entrepreneur that’s really immersed in her or his business or field will be taken by surprise. She or he is aware of the change and simply chooses not to act on it until it’s usually too late.
How many die-hard customers voiced their concerns about Starbucks venturing into areas away from its core premium coffee business? What airline companies did not know that fuel prices would rise drastically (Southwest in the USA seems to be only one that did something about it, it seems!)?
What goes up must come down. That saying also applies in business. The astute entrepreneur who keeps this notion at the back of his or her head will fare. The one who does not will find himself or herself sitting on boxes of unwanted goods that somehow sold like hot potatoes months before.
