What can be more valuable than taking what we have learned during our past and invest those lessons into our future? We have either already paid the price of learning from our own mistakes or reading about the successes of others. The word ‘radical’ comes from the Latin for getting back to the roots. Take a regular radical step and examine your roots by asking the question: “what business am I in?”
With the stresses of the current economic environment, now may be a good time to test some assumptions. Inertia is an extremely powerful force and can be a negative one if you are static. For our second foreign word today is ‘risk’ which comes from the Italian riscare which means to dare which implies a choice and not a fate. We make overarching strategic choices rarely and tactical choices almost every hour. When is the last time you reviewed or updated your business plan? Are the choices you are making or the risks you are taking in concert with achieving the goals set forth by your strategic plans? If things aren’t going the way you like them to, wake up!
There are at least four responses to dealing with risk: You can avoid it, reduce it, transfer it or accept it. But you need to manage it by your awareness and the choices you make. Has the marketplace around you changed? Are clients requiring different products, services or technology? Maybe you need to go with the flow and reorganize your resources to delivery according to the current demands of your clients instead of trying to do business by your traditional methods and practices.
For example, as I attract new prospective clients, I have recently found that many are not ready for prime time manufacturing. Most are starting their businesses with some innovative ideas or creative improvements on products currently available in the marketplace. With all these new ideas coming my way I have signed more Non Disclosure Agreements in the past six months than I have in the last ten years. It amazes me how many people want to get started in some form of the apparel business. My challenge has been that I could not charge for my services in the traditional method of manufacturing products and marking up on the costs. The start-ups simply and rightfully do not commence with large enough volumes of merchandise to defray the costs of doing business.
Sure, I still have new prospects that can start their business with me with adequate volume and I am glad to have the opportunity to grow with these clients. But the new start-ups require a different set of deliverables. In the past I would have passed on the business as being too small in volume. But today I have expanded my thinking to offer consulting services to these newcomers. They may reach a critical mass sometime in the future to be producing in adequate volume but their needs are different today.
Sam Walton’s strategy was to substitute knowledge for inventory. He installed a satellite system that uploaded sales figures regularly from all the Wal-Mart stores. This information was downloaded to the vendor’s EDI system and automatically orders were generated for the necessary products at the right places and just in time. Walton was able to trim costs for warehousing, freight and distribution and pass these savings onto his customers.
Inventory is only one type of asset that knowledge can replace. Advising a start-up as to how and where to invest their time and money based on the guidance of an experienced consultant will certainly add value. Getting the right direction at the critical points may even help in the eventual success of the new venture.
New entrepreneurs typically have limited funding so they best spend it wisely in the pursuit of minimizing the time it takes to get from ‘concept to cash flow.’ Markets and customers may be demanding and impatient, but being prepared to make the right choices at the right time will add to the prospect of success.
Think about what products and services your customers need now and see if you can adjust your resources to serve the demand. Don’t let inertia keep you in a mode required to service needs of the past. Find new vendors for new products that your customers want. Use technology improvements to offer valuable new features from anti-microbial to UV protection to supporting the Green movement. Respond to the needs of today by keeping up with new ideas and using your valuable skills learned in dealing with people in the past. Your future depends on it.