Jun 6 2016
Six evergreen challenges all businesses should prepare for
In our High Growth Growing Pains series we talked about predictable stages of growth and crises that businesses undergo as they grow in size and complexity.
Whilst Greiner’s model is a very powerful tool it’s important to realise that every business is different and grows at its own pace. What’s more, not every organisation will undergo every single one of Greiner’s crises and many businesses may never reach the later crises. Some organisations may even experience Greiner’s crises in a different order.
There are, of course, many more challenges that aren’t associated with Greiner’s evolution / revolution cycle and these can present themselves at various stages in a business’s development.
In this article I want to look at six ‘evergreen’ challenges that businesses face.
1. Succession amongst Senior Leadership
Successful businesses can exist for decades or even centuries and succession amongst senior leadership is an important strategic consideration to bear in mind. The first executive board of a business is often made up from those who founded the company and when one of these individuals decides to retire or take more of a back seat, the loss of that passion, talent and experience can be a real blow to the business. Identifying and developing successors, and appointing them to sit around the top table should be a considered and democratic process, and requires a properly thought out framework if it is to run without a hitch.
2. Nurturing High Potential Employees
In many ways getting this right will also go some way to addressing our first evergreen challenge. It’s important to be able to differentiate between raw talent and high potential when it comes to identifying future business leaders. Whilst the two are not mutually exclusive, it takes more than a good track record to progress up the ranks of management and deal with the various challenges along the way. Successful companies have learnt to identify this potential and nurture it by exposing these employees to various elements of the business to give them a rounded knowledge of the company and its challenges as a whole.
3. Generating New Business and Sales
All businesses require a constant revenue stream, not only to survive but to grow and expand into new areas and markets. Every business is different and many will rely on a single service that has been established through reputation building. Businesses like this will often acquire a lot of repeat business and referrals, but they can also tend to plateau in terms of growth. Growing a business means constantly looking at ways of generating new business and leads through a combination of marketing and sales, and this means investing revenue back into these areas of the business. Having a solid business model is always a good starting point but all businesses should have a strategy to generate new business into the future.
Every business has to deal with the challenge of competition. Even if your business is the only one doing what it does, it is likely that competition will eventually materialise, especially if you end up creating a lucrative market for your unique product or service offering – just because you did it first, doesn’t mean you’ll always be the one doing it best. Competition is a perennial challenge and often the biggest threat to any business’s long term survival. It’s important to try and understand what the competition is doing and look to find ways you can do it better or differently. Without constant innovation businesses can quickly find their customers leaving for the competition.
5. Market Trends
Our last two challenges are the ones that businesses have very little control over but this doesn’t mean that they should be ignored, put down to bad luck, or that nothing can be done to counter them. Whilst businesses cannot control market trends, they can keep a close eye on them and adapt and shift their business model accordingly. This could be anything from the fickle zeitgeist of predominant fashions and fads to more fundamental shifts resulting from technological innovation.
6. Economic Downturns
Even harder to predict and react to than market trends is the economic weather. Factors affecting this are global and disparate. A good solid business model should prepare for economic downturns and recessions by having the ability to flex and shrink overheads in reaction to diminishing consumer activity. Whilst some industries do better in recessions (the so-called ‘lipstick effect’), the pain suffered is generally universal and those businesses that tend to survive are those with the strongest financial reserves, established customer bases, flexible business models and a leadership team able to analyse market conditions and take decisions accordingly.
To chat with our business consultants over a coffee about the challenges your business is facing – or to help us understand better the measures you have put in to counter challenges such as these – why not get in touch today?