Every business goes through cycles. Cash grain and dairy farmers know all about the stormy bottoms of market cycles. In good times, they expand — sometimes rapidly. In not-so-good times, they still have to pay for the expansions.
But if you’re not careful navigating the storms that the market and fate throw at you, you can cycle right out of existence, warns Dave Hopson, managing partner at the Triumphs information-technology consulting firm. That’s why nearly 50% of all new businesses don’t make it to their fifth birthday, according to the U.S. Small Business Administration.
Startups often stall out due to too little capital, faulty marketing plans or sometimes not keeping up with technologies crucial to always-evolving challenges. Staying successful is tough enough for established businesses.
Thrive, not survive
Hopson offers these tips for business success, not just survival:
• Grow and professionalize your IT. Even in today’s agriculture, “information technology is your business’s backbone,” he emphasizes. “I don’t care what business you’re in.” That will keep your systems predictable and ready to adapt to the next business phase.
• People and processes are also part of the business cycle transition. Successful ongoing transformation of a business depends on them as well. Each must be fully integrated with the other two.
When you leave out one, Hopson says, your business’s functions are no longer effective and productive. When technologies change, employees must also be able to change. Otherwise, you may not be able to survive the next business cycle transition.
• Keep employees informed and engaged. Part of a leader’s role is to let employees know where you are in the business cycle. Educate, encourage and inspire them to help bring your business through that market bottom.
• Don’t stand still. The “business storm cycle” will drive you to constantly reinvent yourself as a business. If you fail to recognize that the status quo won’t last forever, the market will leave you behind. That’s what many dairy farmers have already discovered.
• Be prepared for a “tornado.” Hopson calls periods of high growth potential or high margins “tornados.” They can be caused by new products, new markets, technology breakthroughs, newly available cropland, even mergers.
When you understand all phases of your business cycle, “you’re less likely to be caught unaware by these hyper-growth opportunities,” he adds. You’ll also know how to make one of these growth phases last as long as possible so you can pull more profit from it.
Hopson developed a model to help plan for each predictable phase of their business cycle. He’s also authored a book titled “Surviving the Business Storm Cycle: How to Weather Your Business’s Ups and Downs.” For more details, visit davehopson.com.