The Harsh Reality
In 2007 business got off to a great start when Dan Smith (not his real name) opened a video store in my town. He and his wife remodeled a storefront and opened with 500 video titles. Revenue rose each month and he plowed the money back into the store, gradually expanding his collection to 5000 videos.
Then in early 2009, a Red Box opened outside the Winn-Dixie across the street. Smith’s business began going down, down, down. Red Box, a national chain rents new releases for $1 a day- something no Mom-and-Pop store can do. Smith struggles to rent a new release for $3.75.
Competition and innovation are big reasons why video stores and many other businesses have vanished from neighborhoods where they were fixtures not all that long ago. Smith feels the pressure, but he’s proud his store is still open and remains the last independent one for miles around.
“If you can do something better, cheaper, and smarter that’s what America’s all about”, he says, gesturing towards the new device that has captured so many of his customers. “I’m not mad at anybody… I wish I had thought of the idea first.”
Now business is slow and revenues are down, especially because new videos provide 90% of his stores income. It’s still paying for itself, but “the inevitable is getting closer and closer” says Smith.
Red Box isn’t his only rival. There’s Netflix, Blockbuster and the many new ways of streaming movies directly into homes.
“Everything was fine until technology caught up with us”, Smith added.
Smith’s business is not the only business that has been affected by technology. A travel agent friend of mine lost most of her business when internet bookings took off. She has since started another business.
The cell phone industry has put a huge dent and downward pricing pressure on in the traditional land line phone business. In a few years, smart phones, which will be able to do everything your laptop now does, will do the same to computers.
On a personal note, my business has been affected by the internet. No longer do companies have to spend a small fortune sending their sales people out of town for sales training or sales management training seminars. Today with the advent of webinars and teleseminars, sales managers and sales reps can acquire new sales skills by sitting in the comfort of their home or business where they can consume information via the web at a fraction of the cost to attend out of town seminars. The impact for me has been sobering in that it has created a downward pressure on pricing, greater difficulty in filling live workshops and seminars and more resistance to fees charged for coaching and consulting.
The Choice is Yours
Technology, increased global competition and marketplace changes are three powerful forces affecting every business today. Because of these forces, the attitudes, skills, beliefs, sales and marketing processes, product offerings and market focus that got you or your business to its current level will not suffice in getting you to the next level. Not only will your current ways of doing business not get you to the next level, they will not be enough to sustain your current level of success long-term.
If you are to survive and thrive in this high speed new economy, you must reinvent yourself and your business. As Dan Kennedy, one of my mentors says, “if you are trying to do business 3 to 5 years from now the way you are currently doing business, chances are you won’t be in business at all.” A sobering thought indeed.