The Business Owner’s Journey (A tale of happiness and woe). – John

The Business Owner’s Journey.

What is ‘Business Owner’s Journey’?  This is the journey that every business owner goes through when they start a new venture or even inherit a business.  The steps along the journey if taken right, can lead to a fulfilling owner’s journey, if not they can lead to not just business disaster but personal disaster as well.

The business owner’s journey starts with an idea, the budding entrepreneur has either a sudden flash of inspiration or notices a gap in the market. It may be that they’re frustrated with their current circumstances, or that events have conspired to make it necessary that they make their own way in the world.  

Whatever the initial spark is, it’s the beginning of a journey of discovery for them.  How to start a successful business is not taught in schools (even in business schools) so for most budding entrepreneurs they start out pretty much in the dark about how to go about building their business. 

Assuming that they’ve gone through the business registration process (which varies from administration to administration) our budding entrepreneur’s first step is defining what they’re selling whether it be a product or a service, and finding their first customers.  This is generally an easy first step, as for most people they start by doing what they were doing in their previous occupation. 

They could be working in the accounts department in a large business and decide to start their own accounting service or providing technical IT services and deciding to set up their own IT company.  Or they’ve been running a craft business on the side and it looks like it may take off.

There are a myriad of different possibilities, the point here is that there is a trigger that starts the ‘Business Owner’s Journey’ for them.

Having taken the first step our budding entrepreneur now needs to get their first customers. For some businesses that are developing new products, this is a step that they often fail to take, all their efforts are focused around building the best software app or widget.  In the end, their business runs out of cash and dies.  So getting your first customers is a vital first step. 

For most budding entrepreneurs this is achieved through farming their ‘near circle’. The ‘near circle’ can be defined as your family and friends (if they need what you sell) or the customers of your previous employer. Either way, it’s generally what we like to call ‘low hanging fruit’, these are people who are more likely to know and like you and are very likely to take a chance on you and your new venture.

The moment of Truth…viability crisis or sustainability crisis.

As a business starts trading there comes a time when they will face a moment of truth.  For some, this moment may come very quickly for others it may not. It can take different forms such as they run out of cash and must look to raise more, or they can not service their customers due to operational difficulties, or a key employee leaves.  

The most common problem they have is that they have grabbed all the ‘low hanging fruit’ and have run out of customers. Knowing how to market your products or services is a key skill that lots of small businesses lack. Whatever causes this moment of truth to occur, it is a crisis point for any new business.

While they are trying to overcome the problems they have, their business will in all probability plateau, and it may even decline. This is an extremely dangerous time for any business. Solving these moments of truth are key if the business is to survive. 

It’s important to note that as a business grows there will always be moments of truth, it will never be a continuous smooth path. The nature of the moments of truth will also change, they can be problems with viability, i.e. the market changes or was never there in the first place, or sustainability, i.e. the company has run out of cash and is no longer sustainable, whatever they are they need to be overcome before the company can resume its path to growth.

Viability crisis verse Sustainability crisis.

We define ‘viability’ as the business operating in a viable market. This can take many forms but generally, if another business is already operating in that market successfully then there is a viable market. 

A viability crisis happens when the market for your goods or services is no longer there. For example, if you owned and operated a ‘record shop’ where you sold vinyl records you would have adapted in the 1980s to selling CD’s and tape cassettes but would have struggled against the online behemoths such as ‘Amazon’ taking your market in the early 2000s and would have been completely wiped out by the rise of the online streaming service such as ‘Spotify’. 

Of course, there are still some niche players in this market who serve those people still wanting vinyl records, but essentially the market for physical recorded music products is no longer viable. I could have used ‘Blockbusters’ as an example here with the market for video rentals.

Changes in how the market wants ‘serving’ also creates a viability crisis. The market for the consumption of music or videos has not disappeared but changed from owning or renting a physical medium to renting or streaming a virtual medium.  Those that weren’t able or willing to adapt to this new reality unfortunately are no longer with us.

The Coronavirus pandemic created a crisis for many businesses. They were no longer able to serve their customers in their traditional way.  Customers were stuck at home and turned to the online world to serve them. Many businesses found that they had no option but to develop an effective online strategy in order to survive. 

Changing business delivery models can also create a viability crisis, as demonstrated by the problems many traditional retailers have had. Not having a viable ‘click and brick’ strategy caused the demise of many retailers.

Sustainability crisis.

A sustainable business is one that has a future, they have products or services that have a viable market and they are able to service that market through the systems in their business (To find out more about the systems you need in your business, read my blog on the 4 cylinder business model here).

A sustainability crisis occurs when the business is not able to service its customers or find enough customers to service.  The world-renowned business guru ‘Peter Drucker’ famously said that the purpose of a business is to ‘create a customer”.

For example, a business may have started up and have ‘farmed’ their near circle of friends, family, and acquaintances but be unable to attract new customers who do not know them, due to their lack of knowledge of marketing. So in this case the business is operating in a viable market but is not sustainable due to the lack of customers.

Many early-stage startups run out of money due to various reasons, but the fundamental reason is that their cash burn is greater than their ability to attract enough customers at the right price point. Thus the business is no longer sustainable.

Lack of control over market channels.

A business may operate in a viable market but its channels to that market may not be sustainable. One of the problems of many businesses that have built their business using social media is that they do not control the communications channel with their customers. 

If Facebook, Instagram, or any of the other social platforms decide that they no longer want you using their platform there is little you can do about it. Effectively you don’t own the customer.  Businesses that operate purely on social media platforms can have sustainability problems.

Overcoming any crises and resuming a growth path is key for the business to achieve sustainability.

The Sustainability / Viability Matrix.

Not Viable / Not Sustainable.

A business that is neither viable nor sustainable. There can be a variety of reasons why businesses start-up but end in this situation. Generally, it’s due to a lack of market research in the start-up phase. There never was a market for the products or services in the first place or that the market has moved on and no longer wants serving as the company proposes to.  This leads to a sustainability crisis as the company burns through what little capital it has.  

Recovery from this position requires the company to recapitalise (ensuring sustainability in the near term) and reposition itself into new viable markets.

Viable / Not Sustainable.

A business that operates in a viable market but not in a sustainable way or is not sustainable. This is probably the most common problem that businesses face. The market they operate in is very viable but they as a business are not sustainable. They could be under capitalised or they could have operational problems that are causing them difficulties. This is fairly common with businesses that initially grow rapidly, they are successful in acquiring customers but they don’t have the necessary resources or systems in place to service them.  In order to overcome these challenges, the business must develop systems that allow them to service their customers effectively. 

Viable and Sustainable.

Businesses that are both viable and sustainable generally have great products or services and deliver them in a manner that is sustainable.  This is the position that all businesses should be aiming to achieve. Done correctly this allows the business to develop into a high-value self-managing business.

Sustainable but not viable.

Businesses that find themselves in this position quickly realize that it can only ever be a temporary arrangement.  The business is coming from a sustainable background but find themselves operating in a non-viable market.  They have little or no choice but to quickly find a viable market before the business becomes no longer sustainable. 

Moving between the quadrants.

The first step in any change programme is to recognise where you are. Obviously, the ideal position on this matrix is in the top right-hand corner, having both a viable and sustainable business. To help you establish where you are now we have developed our fast business diagnostics. This takes just a few minutes but gives you a quick snapshot of where you are. To access the diagnostics hit the blue button.

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