Before Taking Your Next Business Decision, DO THIS.
You are a serial Entrepreneur having experience in building, growing and advancing multiple businesses since years. Or perhaps you are new to the world of entrepreneurship and in process of starting your first venture. Or maybe you are a senior manager working as an Intrapreneur in the corporate world looking into the next best move for your organization and yourself. There is a good chance that your next business decision is wrong! Unless you have already done one thing, or actually couple of them.
You may be in a process to launch a new product or service or you may be about to establish a whole new business altogether. You may be in a process to update and adjust your business strategy. You may be intending to adjust your business model, or some of its underlying business processes. You may have a plan for expansion in certain markets or entering new geographies. In all these situations, there is this one thing you should have done, before taking any other business decisions, and specially more so these days. And if you have not, then stop, and take this action first.
Let us put this into the context first by listing some background information.
A lot of shops were closed down during corona crisis. Some are forever! And they are from any type of business you can imagine. And this phenomenon is not even new. The current crisis did only magnify their problems by a factor of 10 or 100 or more. It is sad, but it is a fact.
According to Shopify, the share of eCommerce in the global retail market [even before corona crisis unfolded], has doubled since 2015 from 7% to 14% and is projected to reach 22% by 2023. Read this twice. Almost a quarter of retail business, which is a huge sector in all economies is becoming eCommerce in about two years.
While the restaurants are going bankrupted one after another, “Takeaway” confirms takeover talks with Britain’s “Just Eat” to create one of the world’s largest meal delivery companies, handling orders worth more than rivals like GrubHub, Delivery Hero and Uber Eats. Reflect on this. It is unfortunate that more people not only buy while sitting at home, but also eat restaurant food at home. But if you are about to create and take care of your business, there is a message for you in this.
According to CAPA Center for Aviation, by the end of May-2020, most airlines in the world will be bankrupt.The world we have built over the last two centuries cannot function without global aviation industry. But think about it. Some airlines claim they may not be back to their normal operations level over the next four years and some others say, they may retire some of their larger planes forever.
According to The Verge, Zoom grows by 50% to 300 million meeting participants in about three months. And they are not the only fast-growing company providing video conferencing solutions. What is your take from this information for your own business?
According to Fox Business, the American hospitality and leisure industry lost more than 7.6 million jobs because of the coronavirus pandemic and resulting lockdown measures. This number can be at tens of times more globally. There are fixed assets and unbearable running cost on such a huge industry working at probably 10% of its regular occupancy rate during the high season.
According to Business Insider, Facebook and Amazon notch all-time highs in intraday trading. And this happens this week at the same time as we got all the other news above. What is the main driver for the success of these industries? Do you find a pattern if you read these facts once again from the beginning?
Apple became the first company in the world’s history to be worth USD 1,5 trillion. Not a surprise! And yet they are not the only one among their peers who are experiencing such great days.
According to World Economic Forum, The COVID-19 pandemic has changed education forever. Even before COVID-19, there was already high growth and adoption in education technology, with global edtech investments reaching US$18.66 billion in 2019 and the overall market for online education projected to reach $350 Billion by 2025. Is there a new insight from this information that you can take a note of?
The Fintech sector has suffered a drop in all-level transactions as people keep spending less as lockdowns become tighter.
Let us stop here, although we could add tens of other examples. What do you find common among these success stories which is missing among others who experience adversity? You may have a different answer than ours and that can also be right. But what we claim is that the one common thing among these successful companies that you also should prioritize over any other strategic decision in your business is the following.
Go Online
It may sound sad and we believe it is. But empty shops on our streets is a fact and that is also not a new phenomenon. You probably have seen one shop closing after another or the same location is being rented by different entrepreneurs but are left after few months or a couple of years. And for the last few months, add to that millions of cafés, bars and restaurants who did not or may still not have the possibility to a receive any customers. We also have seen airlines grounding thousands of planes and firing thousands of pilots and staff. And we have seen closed schools and hotels being empty for months. The current crisis has just made this problem tens of times worse than it was before.
Going Online is the only way for the majority of these businesses to survive. It does not need a crisis to realize that all consumer facing businesses are moving towards more and more online presence. Online presence is not a one-time action. Online presence is a journey. Few decades ago, online presence could be to be registered on a city’s yellow pages. Later it became to be having a one-page website with your product information, your address and contact details. With growth of smartphone penetration and access to high speed mobile internet and the “mobile-first” strategy of many businesses resulted in mobile Apps and their mobile friendly websites becoming as important and later even more important than websites. The next step was social media. Presence on social media were first for teenagers, then became something for adults and later for small shops and businesses followed by the corporate world. Today, you see even a construction company having their customer only among governments and other corporations being hyperactive on social media. Why do they choose to do so? What are the next developments to expect? Customer engagement and interaction online beyond today’s support desks and chatbots? Virtual reality or Augmented reality experience for potential customers before and after they have done any purchase? What else can you think of?
What Is Really An Online Business
The point is that you are not online! You may say, I have the best website with the latest software technology you can imagine, I have a mobile App which is representing my business to my customers while on-the-go. And I am active on social media promoting my business on daily basis. But that is not being online!
As we mentioned, being online is a journey. And any business journey has to start from your business strategy. Hence you should ask yourself below questions first, to understand if you are really online or not, and if not, how you should really Go Online?
1- Ask yourself, what kind of business am I in? Is this a physical service delivery such as an airline or hotel which by nature cannot be done online? Write down the answer and continue to the second question.
2- Ask yourself what parts in all nine components of my business model are already online? Any Business can be visualized by its “Business Model”. There are different methods to visualize any business model. “Business Model Canvas” is one of those which shows a business’s structure and components in nine elements: Partners, Activities, Resources, Value Proposition, Customer Relationships, Channels, Customer Segments, Cost Structure and Revenue Streams. If you have questions on how to list and map out nine Business Model components of your business, you can ask us. After answering this question go to the next question.
3- Ask yourself, in the components where you have embedded online solutions, what is the contribution of those online element in the success of that component. For example, if you have online presence in your “revenue structure” – the last component in the Business Model Canvas – ask yourself what percentage of your total revenue is generated through that online solution or online product or service? After having the answer written down, go to the next step.
4- Ask yourself, is your level of being online in all the components of your business model in line or above your peers like the similar shops, companies or enterprises in your industry, your country, or your region? For example, if you are running a restaurant, ask yourself what part of sales of your competitors are coming from their online channels like their website, their App or via meal ordering services, such as Takeaway, UberEATS and others they are part of. Finding the answer to these questions on your competitors can be difficult both for small and larger companies. But try your best. It is important that you have a good picture of your sector and the market you are part of. Go to next step.
5- Ask yourself, Is there any action or project in my strategic or tactical plans (or simply in my mind) that is going to help me improve the share and impact of my online presence in the areas I identified above? List all your ongoing and also planned initiatives and projects and answer this question by reviewing the list you have created. Now go to the next step.
6- Ask yourself, Can I reprioritize all my projects across the business by bringing up the ones which will improve my online presence in any of the nine components in my business model? Is there any new initiative which will bring more online presence than all the other projects already on the list?
By now you should have a good understanding of how much you are really Online. Are you making money online? Are you having value adding cost elements (ingredients, systems, or services you use) which are online? Are you having partners providing online services to you or interacting with you online resulting in real cost saving or increased revenues? Are you having a value proposition which is purely or partially online? Are your customers paying you for the online services you have provided to them? Are the interactions with your suppliers online? Are you having a high percentage of your support processes enabled by software and solutions that are helping your people and not adding to their workload and, hence causing frustration? If the answer to any of these questions is less than a big yes, you have a need to change your priorities.
Revise Your Priorities
Now it is the time to review your updated list of initiatives and projects and think. If you are a solo entrepreneur, spend time on reflecting and involve trusted mentors and experienced experts in reprioritizing your plans. If you are an SME or a Large Enterprise, trigger your strategy and tactical planning process. There is nothing more important than going online. Do not waste your resources before ensuring you have created customer value and business resilience by building online enablers into all elements of your value proposition and business structure.
Although not all can benefit fully form going online, this is the very first and most important business decision any company should take, both today and tomorrow. Yes, that is true that airlines and hotels cannot replace their services with online offerings. But as mentioned, the need for deploying digital solutions and increasing your online presence is not only to create or add income (revenue streams). Such companies may well benefit from building online presence in some of the other eight components of their business model. Think of remote working. A smaller office space has huge benefits to the fixed cost of any company. Going online with the processes that do not need the physical interaction of your people and your customers, can help a little bit now and much more so over many years ahead beyond the current crisis. Hence, do not waste the time, review your strategy and plans, find every opportunity you can Go Online Now.
Sell To The World
Any great business should have Customers across the world. Not all businesses can. But think about it. Most of the companies we have mentioned earlier in this article and thousands of others have created products and services they can sell principally in any country and city in the world. They may not choose to do so. But that is their choice considering the costs and benefits of presence in each market. Think of Apple. If they did stick to few countries, would they become the first USD 1,5 trillion company in the world? What about the impact of crisis or a political situation affecting their business in a country or a region if that was their only source of sales?
Can you sell some of your products and services to the customers on the other side of the city, to the other cities in your country, to the neighbor countries, or further beyond? You do not need to make the entire world your customer. But make at least the world around you, so. The current crisis will be behind us after all. How do you prepare yourself for the next one? And the mistake you can make, is that you take your next business decision without considering an alternative way which makes you more resilient by expanding wider geographically to the next village or the next continent.
Imagine if you are a good chef and the owner of a small restaurant. Being in the lockdown during current crisis, you could still earn money despite your restaurant being closed. How? By delivering food online, or by preparing meal-kits (half prepared meals) selling them to your regular customers for the period that they cannot visit your restaurant, or by having a website teaching your skills on how how to run a successful restaurant for those who are not in the lockdown areas on another side of the world. You have the entire world – or at least the parts which are not in a lock down – as your audience. On this last one, someone would say, what if everybody starts to provide such trainings? Who will really then cook? Is this going to become an overcrowded space soon? The answer to this is a clear NO! First of all, this is one of the ways to create Additional Streams of Income for your business and not the only one. Second, this is not for everyone and every business. And third, majority of the people asking these questions are also the ones who do not take such actions and stay skeptical while few others are enjoying its benefits. The point is not also that all of us should start teaching others and stop what we are doing as we do not want a world of teachers without anyone doing anything else. This is only one of three possibilities in the above example to show, why and how you should create a portfolio of services to create resilience for the good and the worse days. And that brings us to the next thing you should do.
Diversify
Do you have a portfolio of products or services? A portfolio of products or services can be as simple as list of all different things you produce and sell or the services you deliver to your customers. But to diversify, is something more than that. Diversifying your products and services is not to just increase your products or services on your menu or your list. Think of three things. First, what can you sell to your customers while they are purchasing one of the items from your existing portfolio. Second, what might the customers who purchased something from your portfolio may need tomorrow which is not on your list of products and services? And third, what might your customers need when they cannot buy your products and services? For this last one, use the current crisis as a frame condition to discover answers. Answer to these questions can help you find out how to expand your offerings and diversify your service portfolio creating more value for your customers and resilience for your business. Are there online presence capabilities that can help you create new offerings answering to one of the three needs above?
Language, Location, and Logistics
A good business must be in English! You can run a phenomenally successful business in your local language or another major language like Spanish. However, a non-English business limits your possibility in serving customers from around the world. If you have a good niche in your own or another language, that is great; stick to it. If not, think twice, before starting a non-English business as this automatically limits your potential audience.
A good business should also be doable from anywhere. Having a business with more locations brings more cost irrespective of your income or number of customers. If you need a location as part of the nature of your business – often called brick and mortar businesses like a shop, a restaurant or an airport – then do so, but optimize. You may not need all what you have today, given the changes in the world over coming years and decades. If not and if you are able to adjust your business structure and business model so that you can reduce the non-customer facing location as much as possible, do not wait a second. A location independent business is what creates freedom and new opportunities to invest in what matters: your people and your products and services.
A good business should have no need for large logistics and storage. Logistic is a hassle. It costs money and it also may bring risk of loss or perish if you sell products losing their quality over time. Entering a business that has zero or limited logistics and storage needs, saves money and time. Again, not all businesses may be able to live without logistics. But choosing your new venture and business decision, you should think about this first.
Revenue Models
A good business should be enjoying Online Payment. This is also a way to prevent Accounts Receivables. In addition, online payment saves cost and time of attending invoices and payments. It removes the whole process and puts it into your website or ecommerce platform.
Chasing customers to pay for what you already did for them is a painful exercise. What if they have already paid before they even got their service? Getting paid in advance in a high-end restaurant may not be even imaginable. While in a fast food chain is quite normal to pay before you get your food. Selecting businesses that create no or limited account receivables is beneficial with simple reason that you spend no or limited time to collect the money after delivering the service to your customers. You may also transform your existing business to be so.
A good business should also get paid again, and again and again by having a recurring revenue. Think of your subscription for mobile or internet. You pay your monthly subscription fees irrespective of how much you actually use your phone, unless you have a pay-as-you-go service which can become more expensive. A subscription fee guarantees a stream of income for your service provider enabling them to run a stable business and eventually invest with more confidence for the future.
Closing Remarks
The above list is not meant to be an exhaustive list of considerations on how you can take the right decision for your business. But they were in our view the most important ones in today’s world. These considerations are the ones which will extensively increase your chance of success and your resilience in dealing with the realities of what future has to offer to you, being them challenges and crisis or great opportunities. To get prepared you need to attend these and be prepared.
But think about them. See if you can find a red thread going through all of them. Yes. Going Online. You need to create the capabilities or ask for assistance to bring your business and the nine components of its structure online. You need to define a journey on how to stay on top of the curve and benefit from the developments in this domain which is helping many businesses grow and create more profits. Trying to sell to world, you need to attend English language, Think of optimizing your locations, and reduce or outsource your logistics. Keep looking for new customers in the next village or continent. When diversifying, think of products and services related to your core.
Having a basket of not related products and services confuses your customers and what you have to offer to them. Doing so is not even diversification of products and services but of your investment portfolio which is a different thing. When diversifying you need to have other related products and services which your customers want at time of purchasing from you or later in their experience with your products or in case they are not able to use or get your products and services for while. You need to use digital components in your service offering to be able to diversify as some of your enhanced service portfolio will be enabled partially or fully by digital components such as remote offerings, home deliveries, web content and so on.
Trying not to chase the money. You need to create online payment, recurring revenues (subscription or something similar) and advance payment as default. All these components can be easily or only achieved by Going Online. You need to create or modernize and enhance a great Website to be present online, you need to be available on-the-go through your mobile App or responsive website. You need to be on the social media and engage with your customers. You need to create your online shop and start selling online. You should create online payment gateways to automate invoicing and payment, reduce or remove credit collection and ask for pre-payment.
The one red thread through all these, is in fact to “Go Online”. The more you go online, the more you create the possibility to automate and bring more online solutions to various aspects and components of your business. This creates enhanced value for your customers and results and resilience for you and your business. Hence stop what you are about to do next and do this one thing before anything else.
Success!
Exercise: As an exercise, go through all examples of success or failure in the beginning of this article. Try to think of their business model using the business model canvas. Then try to think what in each of these businesses is really online and what can be improved in its level of benefiting from being online. After this, think of your own business or your own organization. In which of the nine components of the business model is your company really online? In which ones have you home for improvement? What are the possibilities to improve in those areas? Do you know all the available and affordable technological solutions to bring those components online?
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