Business it seems is more complex and sophisticated. There is always something going on. In an increasingly change absorbent world, sometimes its easy to get distracted and lose sight of what we are supposed to be doing. What makes us competitive one day, can overnight become almost obsolete, exposing the business to vulnerability.

At your next team meeting, instead of focusing on cost cutting or even client management, conduct an exercise that identifies your businesses critical value drivers. Ask a number of deep and thought provoking questions.

1.What is it that our customers value most?

2. What are the future opportunities for value creation and where are they shifting?

3. How are we going to ensure that we are moving our capabilities in line and beyond those shifts?

4. What relationship are our customers going to want from us in 3 years time?

That dictates where your core activity needs to be placed. Some would argue that you can outsource or partner on the rest!

It’s easy to get stuck in a cycle of movement and we can all be forgiven for thinking that our business is changing, doing new stuff and improving results, when in fact, it’s not. You’re just going round in circles, embedded in what I call ‘revolving door’ syndrome.

Take a look at the new Bailey’s advert http://www.youtube.com/watch?v=YjW4iFuO-WU They have added a ‘coffee’ alternative to their product range under the pretense that it’s product development but it just feels like a desperate attempt to compete with new entrants to the market. Its false, this isn’t change, it’s just messing about.

Many companies are guilty of ‘re arranging the deck chairs on the Titantic.’ Look carefully at you business, as each month and year passes, are you just revolving or are you truly evolving?

Loosing ones nerve – In the initial stages the start up business owner takes a risky path. Whether it’s a huge investment of money, re-mortgaging, giving up a great job or spending time away from family and friends. He/she is not afraid of digging deep into their pocket, nor their soul, to make things work, deliver a great product, find fantastic customers and grow their business.

Then it reaches a critical point. A place where everything that stimulated the company’s rise starts to slowly diminish. The owner suddenly acquires deep pockets and short arms. Risk becomes too risky and the business starts to lose touch. Touch with its customers, touch with its people, touch with new products/services and touch with new trends and thereby starts the path towards decline.

It can happen for a number of reasons. The owner is financially comfortable and won’t risk that being compromised. The owner is tired. Lets face it, it takes an enormous, unwavering amount of energy to grow a small business and sometimes, we just run out of steam. Or, in many cases, that’s as far as the expertise, knowledge and skills run and its time for someone else to take over, either through acquisition or through a new management team. Recognising this five years ahead of it happening is critical so succession planning can take place.

Planning that far ahead can mean the difference between your company being worth a good sum or absolutely nothing.

Many small businesses have a natural life cycle. They grow steadily over several years, flatten out and then either decline over a period of time or remain in a state of survival until the owner retires or dies. This pattern of ultimate survival will, in the future, no longer be possible. Too much competition, too many inspired people and too many great products will not just nudge a lot of small businesses into oblivion, they will give it a good old, hard boot!

However, there is nothing natural about this life cycle. Far from it! The problems that lead to ‘flattening out’ and demise are failures in leadership and a focus on short terms gains for the owners of the business, rather than following a path of sustained business growth.

The causes can be traced clearly to a number of pitfalls that business owners succumb to over time. Over the next few days I’ll be posting a series of causes. The first one I’ve written about before:

No clear purpose – With no clear purpose it’s damn difficult to drive your business towards its destiny never mind being able to rally the troops and clearly state what your business stands for. With no purpose and no common route map for that purpose, any business will struggle. Purpose gives meaning to what the company is, why people work there, why people buy its products or services and why it actually exists.

Imagine getting in a car with a group of friends and driving off into the sunset without little idea of where you’re heading. Makes a great road trip but its too risky in business, if a little stupid. If it doesn’t get you in trouble immediately, it will in the long run as your company grows and the people working with you demand it. Anyway, how the hell can you create a great team loyal and committed to you without a common purpose?

Not mine but Tom Peters. Thought it was a worthwhile document to read and take on board! It’s got some useful reminders in it….

http://www.tompeters.com/blogs/freestuff/uploads/Heart_of_Strategy_ANN_033009.pdf

There are early warning signs that a business is in trouble:

1. Complaints by the senior team that it never used to be like this.

2. Lots of new competitors taking a large share of what you used to do.

3. Excess provision of what you do in the market place.

4. Your only differentiator is price and, as a result, margins come under pressure.

5. Too much risk management and an excess of market research.

6. Belief that it won’t happen to you.

7. The MD spends too much of his/her time looking over their shoulder.

8. The business is static, gripped in a fever of stand off. Avoid the issue and it will go away.

Big and small, a downturn takes no prisoners. Thousands of business with the above problems are being gobbled up by business with dynamic strategies, innovative thinking and differentiated products/services.

If you are doing one of the above, you’re possibly in trouble. Turn it on its head and change it and rapidly.