Do you value your independence as a small business owner enough?

As the years of recession role on, it’s so clear how important growth and having cash reserves are in your small business. How can you have a sustainable business if you don’t have growth and if you don’t have cash when you need it to perhaps invest or fix things up? How can you have sustainability without economic growth? Okay, some environmental economists have looked at what prosperity could look like in a finite world with limited resources and a population expected to exceed 9 billion people within decades. It’s not an easy question to answer, especially when you are working in an old paradigm and you have to make decisions in the here and now.

But you see companies that have a mandate to pursue the growth agenda taking risks in markets far away from their home markets as shareholders put pressure on them to grow. When the cellphone and service provider market saturates in a home markets what can you do to increase revenue? Jack up airtime rates and because data demand is increasing spike that cost up too. But how far can you go? Next thing you start to look outside in so-called underdeveloped markets where the risk is higher, including regulatory risk.

Now, a small business owner does not have the same shareholder pressures unless he or she has investors in his or her business. A case in point: a small business owner in this economy has expanded no less than three times, making those three decisions himself. His business continues to grow, because he has discovered a growth niche and is providing value that the major national chains can’t match.

The other area is cash reserves. For the listed company the problem is that because of financial rules and regulations only so much cash is permitted to be kept in reserve. Without cash reserves the larger mining or industrial companies find it difficult to maintain operations. In a resources commodity down cycle, you might think that it’s a good idea not to invest in your plant and equipment. But if you don’t, it’s going to be far more expensive down the line when demand for resource commodities increase. Yes, you can find different ways to raise finance later on, but it will come with an added cost.

For the small business owner who has built up reserves, a cash kitty, he or she has flexibility to invest, replace outdated or worn equipment and, when necessary, bring in new technology. Another case in point: a small printing business has bought a new flat-bed, A3 scanner to improve reproduction quality for customers. Without a cash reserve, the scanner would cost double if it was bank financed.

Are you as a small business owner taking advantage of the freedom and independence you have to make decisions about growth for your business and are you building up a cash reserve or cash kitty to make improvements in your business?

Would you handle innovation this way?

What does it take to be successful? Is it innovation, adaptability or striving for a clear goal? Or sheer luck?

Here is a sobering statistic often touted in the success literature: If you take 100 people and follow their lives until retirement, something like only five will be successful, meaning they will retire financially secure. The rest, well you know how it is, they’ll still be struggling until the day they die.

After 60 or 70 years how many companies are still successful? How many are still around trying to survive in the modern world with new digital technology, global markets and brutal competition? Are they also the five percenters?

Two companies thirty years ago were aware of the coming digital technology in film and took steps over time to protect their businesses. One is now at death’s door, yet the other one is thriving.

The one company ramped up digital cameras and expanded its chemical side into pharmaceutical drug products without success. It was slow to change and introduce innovation. Smart phones pummeled its old film and camera making business. This company filed for bankruptcy today.

The other company also went into digital photography, innovated a line of cosmetics and branched out into optical films for LCD flat panel screens. This company enhanced innovation making fast changes. Though it’s been a difficult ride with restructuring, slashed costs and jobs, the company is doing well despite the economic times.

The two companies are Kodak and Fujifilm. You can read more here in a business briefing on technology change called “The last Kodak moment”.

http://www.economist.com/node/21542796

Also look at “Gone in a flash”

http://www.economist.com/blogs/schumpeter/2012/01/kodak-files-bankruptcy-protection-1.

Our lives might not parallel the trajectory of large companies but the lessons that stand out are that change requires innovation, doing things differently and acting when we see the alarm bells rather than waiting until the wolf is at the door, breaking the house down.

Faced with the challenge to change what will you do? Wait or act?

How can you make the changes necessary to thrive in the year ahead and coming years?

The techniques and methods in www.ideaaccelerator.co.za can help you whatever business you’re in. Why wait? Go take a look at the articles and links now. Send us an e-mail to find out how we can assist you.

 Stay inspired.

Chesney Bradshaw

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What does 2012 hold for your business?

At the beginning of the year it is customary to look at trends. In this post we briefly examine a trend that businesses need to follow or they will fall behind.

Will things get worse? How will I keep my business afloat? Where can I find opportunities to grow?

In the midst of economic uncertainty at the start of the New Year questions like these may cause anxiety but they are essential to avoid stagnation and decline. Looking at trends in your business and market is one way to orientate yourself and your business to the pathways that lead to growth and to avoid those that are heading smack into a solid wall.

Trend spotting can be valuable for any business. It goes without saying that whether you are part of a large corporation, a business proprietor or entrepreneur, a solid understanding and knowledge of economic trends is vital for adjusting and even capitalising on the expected economic conditions whether fair or foul.

Watch customer buying trends

Industry or market trends that directly affect your business are just as important. Buying trends and preferences, whether you are in business-to-business or consumer markets, are vital and need to be closely watched. To be on top of the labyrinth of your customer’s mind, you need to spend at least a few hours a week studying their needs and desires.

Trends for the smaller entrepreneurial business this year that need looking at include the continuing growth of business on the Internet, cloud computing, the ever-growing cell phone market, the need to reduce costs and find more effective ways to market products and services using traditional and on-line methods, particularly social media — all of which means creating greater customer value.

Terminal decline?

Magazines provide a case in point. As traditional media, magazines need to play catch up with using social media as part of their reader retention and acquisition strategies. The integration of social media with traditional offline media products such as magazines certainly looks set to grow. For those magazines that ignore this trend or are too slow to adapt, the consequences could be fatal. A woman’s magazine recently closed with the publisher saying that they took too long to integrate with social media and come out with a user-friendly digital edition. These digital editions or many of them are so cumbersome that it is hardly worth the effort trying the view them online. I subscribed to a newspaper digital edition and did not renew my subscription. Fortunately, it was only for three months.

But the malaise with magazines is deeper. In a highly competitive media space magazine content is just not cutting it with readers (circulation figures are drastically down) — not for all magazines but most of them. They just have not done enough reader research. They haven’t used creativity processes to find solutions to keep readers and deepen their reader experience. This is what comes from myopic thinking, looking at what the industry is doing and not examining other industries for break-out ideas.

Quickly grasp this

One trend that continues to grow and which is of great interest to us at ideaaccelerator.co.za is innovation. Riding out the economic storm, leading companies and entrepreneurial businesses have quickly grasped the importance of innovation — from new technologies, product development and marketing to consumer insights and business models.

Small businesses have innovated by reducing the costs of doing business, being more fuel efficient and environmentally friendly, finding ways to attract good employees, and effectively marketing their products and services offline and online. Sadly, given the number of business failures, it’s clear that too few small businesses are innovative. But for those that continue to grow despite the current economic malaise, continuous innovation is core to their success. Among these innovators are those business owners who are quick to use the methods and techniques for new idea generation and creative strategic approaches that we have covered in past updates on ideaaccelerator.co.za.

Keep innovation constant

It’s not just the big ideas that are important for innovation. Take, for example, the following analogy from the cricket world. If we look at the double-century cricket score of Jacques Kallis, South Africa’s greatest modern-day batsman, we see that in the match between South Africa and Sri Lanka at Newlands, he scored 224 from 325 balls. In that score only 31 balls were 4s and one was a 6 (325 balls, 31 x 4 1 x 6). It was the constant batting of smaller scores that allowed him to reach his record score.

Innovation needs to be a constant part of our business lives. A steady, constant flow of ideas is necessary if we want to be successful. Yes, sure the big idea can be earth-shattering, game-changing or make a large impact to our business or in the marketplace. But the big ideas are often few and far in between. We need to innovative every day even if it is sometimes in small ways. These have an accumulative effect.

The choice is yours if you want to stand still in such an economy. To stop growing, to hesitate and wait for change to happen to your business, means that you are prepared to put everything at risk. New ideas meet change head on and spur growth. If you want to embrace change, to not stop growing, then use innovation to keep your business from stagnating or even running into terminal decline and eventual closure.