Businesses are facing serious challenges in today's competitive world. It is becoming harder and harder for businesses to succeed. For the first time in 35 years, American business deaths outnumber business births. This was reported by the U.S. Census Bureau. Before 2008, new startups outpaced business deaths by about 100,000 per year. After 2008, the number has been reversed. Over the last 7 years, business deaths have outnumbered startups by approximately 70,000 per year.
The 5 biggest challenges to business success are:
- Increased competition
- Increased commoditization
- Stricter regulations
- Fear of audits and litigation
- Inefficient processes and systems
With the advent of the Internet and online availability to everything, products and services that were available from protected channels are now available from anyone to everyone. This drives cost down due to the increased competition. As prices go down, margins get smaller and smaller. This makes it more difficult to stay in business.
Businesses are being forced more and more towards commoditization. Products and Services that are being offered are being commoditized. This commoditization forces organizations to do more for less to maintain income and profits. This is forcing many organizations to look at what and how they are doing things.
Because of the political fallout from the Great Recession and the introduction of the Affordable Care Act, more regulations have been put in place that have increased costs for business. The cost to be in business has increased. This in turn increases the need to do more to just keep up.
These regulations also open up the possibility of non-compliance and exposure to audits and litigation. This is a real issue for many organizations. A bad audit could cause closure. Many sleepless nights have been caused by this threat.
Finally inefficient processes and systems become a major concern. Having to do more with less to keep up, makes the processes and systems more and more important. If these are not improved then there are not enough hours in a day to do the work necessary to stay in business.
There are 4 simple strategies to overcome these challenges.
4 effective strategies to maximize success:
- Differentiate yourself
- Improve the speed and quality of systems
- Explore innovative options
- Team with trusted partners
How does an organization overcome the increased competition and commoditization driving prices and profits down? The first strategy is to differentiate yourself in the market. Who you are, What you do, and How you do it is what differentiates your company from all the rest of the companies providing the same products. Your organization is unique in the processes and systems you use to provide value to clients. To differentiate yourself these unique processes need to be embraced and improved.
Successful businesses understand the value that their internal processes and systems have and are constantly looking to improve speed and quality of these systems. It is important to continually look for improvements. Organizations that have the mantra, "If it isn't broke, don't fix it" will fall behind and ultimately fail. Organizations that are always looking to improve and do things faster and better continually improve and provide more value to their markets.
As these processes and systems are reviewed and improved, it is important to explore innovative options. Many times team members involved in the process can help to identify innovation. Other times innovations can come from outside your organization. It is important to team with trusted partners.
When I say trusted partners these can come in the form of vendors that have proven track records in helping organizations improve and grow. These partners would have experience with organizations like yours. They would have innovative systems and products to help achieve improvement. They would also have the ability to lead and guide your organization to success.
As an organization implements the 4 strategies of Differentiate Yourself, Improve Speed and Quality of Systems, Explore Innovative Options, and Team with Trusted Partners, they will overcome the obstacles of Competition, Commoditization, Regulation, Litigation, and Ineffective Processes. These organizations will grow and thrive in this difficult time.
This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.