I rang up a retail owner the other day to find out if he had some specialist supplies that I wish to order. He told me that he had closed down his retail business in Benmore, Johannesburg, in the winter. This business had been trading for the past 50 years. Initially his retail arm was situated in downtown Johannesburg but about 15 years ago he moved out and relocated on the environs of Sandton. Now, it was gone for good.
When I asked him what had happened, whether it was dwindling demand, he told me it was due to a number of factors. Yes, demand for the type of products he was offering had gone down. The weak and declining economy was another reason. His customer profile had changed because of computerisation and the Internet.
No. It wasn’t a poorly run business. This business person had been in the business for 50 years and knew what he was doing. But the days of making a good money were over in his line of business. But the more important question is how vulnerable was this business, is your business, to changing market conditions, buyer behaviour and the weak and ailing economy?
You see, it’s important to think about how your business could be vulnerable. What are your most vulnerable spots? Are you in a market or industry that is declining? How is your business been affected by changing customer buying habits? How is the ailing economy with pockets being tightened impacting your business?
These are good questions to ask yourself. They may uncover problems that you could address in the short and medium term. But remember because your business might be in a so-called “dying” or declining industry, it doesn’t mean that it’s game over. Some canny, small business owners have been able to spin out a new approach or concept from their old business and rejuvenate and morph into something with more life in it.
I looked at a food company, for example, the other day and was interested to see how they have transformed over the years into new product categories such as energy drinks which they combine with things like biscuits and fishing. When I looked at their income statement I was amazed at the high revenues they are producing but equally important than making very good profits.
Yes, I was shocked when I heard what had happened to the retail business that had been in operation for 50 years but I was pleased that the owner yearn has been absorbed by a another small business who have given him wholesale space way he can continue to Rinae’s wholesaling business and serve customers throughout the country that have relied on him for many years. Plus at least 90% of his staff in the retail operation were absorbed by this same small business.
It’s an important story of transformation, adaptation and changing at the right time when the chips are down and moving on. What are your vulnerable spots and how are you going to deal with the consequences when they arise in your small business?