Beyond trends: Building a lasting business

A new shopping complex opened near my house in 1995. And one of the most popular businesses of the day started in one of the main shops on its ground floor.

It was a video cassette lending library. I also into selling and recording audio cassettes. Having such an establishment there gave a big boost to that shopping complex and its surroundings. 

After a decade, the businessman transformed the business into something else.

Running against the trends, he started a big internet cafe and telephone booths. Several years later, even this venture closed down, and he faced a financial crisis, and had to pay off his debts by selling the premises.

Why does it happen like that?

If we look back, we can remember many such stories. What lies behind these failures? Could it be that business ideas become irrelevant? The truth is that even if an organization does everything it needs to do well, it cannot survive if the business is irrelevant.

What types of businesses become quickly irrelevant?

• If the activities or services we do in business can be easily solved by technology, the future is not bright.
• Business ideas that are trending at any given time will often become outdated very quickly. EdTech businesses that emerged during the Corona period and companies that provide virtual services are examples.
• If your customer's changing habits pose a major challenge to your business model, it's more likely to become irrelevant.
• If your product or service is highly susceptible to competition from international manufacturers.
• Industries and enterprises that are harmful to the environment and public health, or that run counter to changing global values, are likely to become irrelevant quickly.

Solutions

• An environment that encourages change and innovation as much as possible should be fostered in the organisation.
• If your business model does not have long-term visibility, do not make large capital investments for it.
• Emotional or personal reasons may change our services for a premium. Often such services are not easily conquered by technology or companies that provide standardised services on a large scale.
• Monitor the latest changes in respective business areas and incorporate the necessary. But it can often be dangerous for businesses to change frequently and take big risks to keep up with changing trends. Such things should be done based on a clear market study and financial projections.

I once again met and talked with the same businessman from my native place. I asked him what changes he would make in his business life if given another chance. 

His answers are useful for any businessman.

It is important to work with a professional to understand the financial future of the business without following the trends and to have the flexibility to change according to the needs of the customer.

Peter Lynch's famous book 'One Up on Wall Street' mentions one of the many criteria he mentions in selecting good businesses.

Business areas that are often boring and without glamour are potentially very profitable. He cites waste
management as an example of this.

When asked what his business is, his answer should be something beyond being glamorous and impressive. If he approaches the business, thinking that in the long run it should be useful to him, his customers and the society, then success is assured.
 

(The author is the Director of Hanhold Consulting Pvt. Ltd. E-mail: reachus@hanhold.com Web: www.hanhold.com Tel: 62386 01079)

*This article was originally published in Dhanam Business Magazine.