5 signs that you may need to change your business strategy
The changing workplace requires businesses, especially start-ups and micro and small businesses, to iterate and be more agile. Here are five situations when a change in strategy may be needed.
In the life of any venture or business, there comes a time – even several times – when it is necessary to re-evaluate the current situation and possibly change the existing business model or strategy. The reasons why those adjustments might be necessary are varied, however, below are five situations when such a change ought to be considered.
1. Actual revenues are consistently and considerably less than projections
When starting a venture, the initial projections tend generally to be hypothetical and highly subjective. However, after a few months of operation, when projections can be based on a combination of past performance and the anticipated impact of strategic activities, there will be a proper basis to critically examine the health of the business and how it is operating in the market.
If, however , over an extended period of time, actual revenues are consistently and considerably less than projections, it may be time to review the strategies that have been implemented. What time frame and what level of disparity between projected and actual figures that will trigger a change in strategy, would depend on the nature of business and the views of the management team on the issue..
2. The business is losing customers
A sure-fire indicator that a business (or venture) might be in trouble is if its customer base is shrinking. Unless it is a decided strategy by management to move into niche markets – where the customer base may not only change, but also shrink – most businesses assess their success by the extent to which they have increased sales and/or added new customers over a specified period.
There can be many reasons for a declining customer base. However, it is critical for the management team to again review the situation against the business’ objectives, and determine the extent to which the current strategies have contributed to circumstances at hand, and what changes – if any – should be made.
3. The customer base is not growing
Although a shrinking customer base might be an immediate cause for concern, if one of the measures of success for a business is a growing customer base, for example to benefit from economies of scale, and or to realise improved profitability, then little or no growth also should be closely examined. Frequently, the reasons are stagnancy in a business may not be as easy to pinpoint, as those for decline. Hence the management team ought to be prepared to comprehensively review the situation, along with all inputs, outputs and analytics that might be available, in order to be in a position to make informed decisions.
4. There is a problem with a product or service
Typically, most businesses tend to strive to sell a quality product or service – consistent with their price point – but from time to time, they might be challenged to do so. Sometimes, management may opt, essentially, to bury their heads in the sand and try to ride out the situation. However, depending on how long the difficulty exists, the impact on the business could include, declining consumer confidence, an eroded business reputation, and even loss of customers.
A more proactive (and preemptive) approach would be to try to address the challenge directly. It may require changes in current operations, systems and processes, and may also include enhanced customer engagement, so that customers have the support they need and remain (hopefully) loyal.
5. Competitors are eating into your business’ market share
Barring there specific restrictions, it is quite rare for a business to be the sole provider of a particular product or service, and if they, and the market is lucrative, it will not have a monopoly for long. It is in that regard that competition in the market ought to be monitored regularly, and if needed, management ought to be prepared to adjust the business’ strategies, especially if the business is losing market share.
It ought to be noted that both short and longer term strategies may be needed, and may need regular review and revision. However, the impetus to change those strategies ought not to be purely reactive to what one’s competitors are doing. There may be opportunities to distinguish and differentiate your business from the competition, in order to improve the chances of its longer term viability and survival.
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