Are your competitors getting ready to introduce a new product or service that your customers or clients prefer? Most businesses would consider that a risk to the company’s existence.
It’s a hard question to answer. Although, since there are not a whole lot of companies broadcasting how they are planning to put the competition out of business, it doesn’t mean you shouldn’t do nothing.
Successful new products fill a need for the consumer. This “new” need can be one that replaces another.
How can this happen? Changing tastes? Shrinking budgets? You can reduce your risk of getting left behind by your customers by innovating and creating that new successful offering instead of catching up to your competitors.
To do this you must be on a constant search for changing customer preferences:
- Ask customers to compare your products to your competitors’. Have them record and organize their reactions. Study these results for trends.
- Stay on top of industry trends by reading trade periodicals.
- Go to trade shows.
Innovation must create a profitable product or service. This means you must measure its financial impact. Track the revenues, costs, and initial investment of time and money in your accounting, POS, payroll, and/or operational systems. Comparing these results to your existing offerings will tell you if you have a winner or a loser.
Remember that even if the new offering is not as profitable as your current one, your existing offering may be on the way out. In other words, you may not have a choice but to go with a new service or product.
The venture capital community understands that a number of failures are necessary for a success. So they prefer a fast failure to realize profits more quickly and reduce costs. If a new offering does not meet many of the early milestones, it may be time to cut your losses. Since milestones will make or break a new offering, they need to measure the relevant outcomes. These measures should include at a minimum gross profit, alignment with your current/target customers, and market potential.
A great product means nothing if it’s unprofitable or does not appeal to enough consumers.
So, What Now?
Many risks can be lessened with careful planning or having protective measures in place such as insurance and disruption response plans. Companies can also innovate to lessen the risk of new products biting into profits. Ultimately, taking control of risk, instead of risk controlling you can mean the difference between a graceful exit or a forced ending.
It is all up to you.