Remembering the basics in the 'New Normal' business landscape
26 April 2013
Doing business as a small or medium enterprise has never been more difficult. Not only do you need an innovative idea, product or service offering, manage your cash flows efficiently, recruit and retain people cautiously, you also need to keep abreast of the fast-paced business landscape that is continuously evolving. Crowdfunding, invoice trading, accelerator programmes, cloud computing, social media marketing and smartphone apps are all part of today’s small business vocabulary. Ingenious Britain’s imminent quarterly magazine accompanying the Sunday Telegraph this weekend will provide some useful insightful into the ‘New Normal’ business landscape.
A changing landscape, however, does not fundamentally change how businesses achieve growth. They still need to establish the fundamentals, ie the ability to sell goods and services, maintain a healthy margin, and try to increase their market share or to grow the market. Ignore any of these elements and the risks will include diminishing profits, negative growth, redundancies, low employee morale, among many others.
So, why are these new business tools becoming ‘essential’ elements of any SME’s armoury? The various factors of market maturity in developed economies, new technologies, and globalisation have empowered customers. They are now able to ‘demand’ better goods and exceptional services at lower prices. The seller’s role in the buyer’s decision making has been marginalised. In light of this, products and companies, big or small, compete even harder to get the customer’s attention, however fleeting it may be. Smartphone apps and social media marketing provide a cost-effective method for companies’ ubiquitous presence in front of potential customers.
There is, however, a difference in developing a presence and the customer following through with a purchase. This decision-making rests on the ‘customer value proposition (CVP)’ offered by the product or service. Managing the CVP comes as a result of a company understanding the needs and requirements of its customers and markets combined with the ability to effectively communicate its ‘value proposition’. Today’s competitive digital world can easily blind marketers into viewing consumers as numbers rather than people.
The emergence of a more technology savvy consumer is another reason for the emergence of the new business landscape. A good idea that captures the eye and fulfils a need may be the next disruptive technology that takes on the world. Being cash strapped should not stop the development of a prototype even though monetisation of the product or service is a distant reality. Crowdfunding, bootstrapping and accelerator initiatives support these prototype developments but, again, the fundamentals of defining the market and the customer value proposition are the missing parts of the equation.
New products and services arising from innovative ideas driven by technology is the new way of doing business, however, this must not be at the cost of marketing and sales. Customers are savvier than ever. It is essential to gain a thorough understanding of your target market, conduct a gap analysis, map out your customer segments, differentiate your product offering and, most importantly, define your customer value proposition. Communicating this effectively will marginalise price from the consumer’s decision, so that you won’t have to offer a discounted product again.
Growing sustainable businesses for SME owners is not going to get any easier. The business of getting a good idea to market at a fair price while appealing to the customer’s emotions requires even more skilful integration. But the basic formula has not changed. Remember the basics and all new business tools will be a ‘nice’ to have rather than an ‘essential’ to have.