As a business evolves, so does the underlying plan to achieve, maintain and maximize profits. It may be time to review your business plan.
Remember when IBM made personal computers? How about when they made mainframes?
For those with really long memories, you’ll recall that IBM first made tabulating equipment, a precursor to computers, right after it changed its name from the Computing-Tabulating-Recording Company (which also used to make commercial scales and cheese slicers).
Times change. These days, IBM doesn’t want anything to do with hardware. As Phys Org reports, the company plans to focus instead on business analytics, cloud computing, mobile services and security. It has even partnered with one-time arch rival Apple (remember the ad introducing the Macintosh computer?) to develop mobile software.
To avoid becoming extinct, IBM is trying to pivot along with customers that are much more software-dependent than hardware-oriented. Hardware sales now represent less than 10 percent of IBM’s business model.
It might seem that IBM is adapting with the times. Unfortunately, it’s a bit behind the curve. In fact, as the Stanford Business School’s Insights points out, this isn’t the first time the company is lagging behind. IBM’s own internal studies show that it failed to capture value from 29 technologies it developed first. Cisco, for example, is a leader in commercial router innovation, a technology IBM invented. IBM was also quick to see the need to accelerate the performance of the web, but others, such as Akamai, moved to become a market leader.
So why is IBM still around, after losing its once dominant positions in markets that are no longer dominant? Well, for one thing, IBM is almost too big to fail. It has the finances and infrastructure to reinvent itself even if it is a little slow in realizing the need to do so.
Small businesses and start-ups lack IBM’s extensive scope and resources. Which is why so many fail.
Reassess Your Business Plan to Stay Ahead of the Competition
To ensure your business follows in the footsteps of Netflix and not Blockbuster, you need to constantly revisit your business plan to evaluate:
- What is working?
- What is not working?
- Why it is not working?
- How you can build on what’s working and fix what isn’t?
Many entrepreneurs think of a business plan as just something to sell the idea of their company to possible investors. GoSmallBiz points out that some SMBs even question the need for a written plan, let alone its use as an ongoing management tool. But a good plan will help you anticipate problems and set realistic expectations. It can provide a benchmark to tell you whether your ideas are succeeding and, possibly, point a way to another approach if you aren’t.
Image via LivePlan
Indeed, Money describes how many companies changed their business plans early on to achieve success in a changing business climate. Podcast platform Odeo transformed to Twitter. Check-in app Burbn moved to focus on photo sharing and became Instagram.
Related Article: 7 Best Free Business Plan Templates
When Should You Change Your Plan?
- When your customers are asking for something you aren’t offering.
- When your great business idea just isn’t so great in practice.
- When your competitors are taking your business away from you.
That said, there are always risks in changing direction. After all, if you’ve lost the way you started out, there’s no guarantee that taking another direction will necessarily get you where you want to go. The Small Business Administration advises:
- Understand what went wrong. Get feedback from customers, suppliers, employees and partners.
- Think it through. If you’re reconsidering your original intent, plan and research why and how you intend to do change it.
- Keep your employees in the loop and get buy-in. Nobody likes surprises, especially at work. Share your thinking with partners and employees so they can understand why you feel the need to change direction and why the new direction is better for all involved. They can help you think this through and come up with approaches that may never have occurred to you. And when you do get ready to make the change, you’ll have everyone already on board and enthusiastic to get results.
IBM was able to reinvent itself, even at a lumbering pace. As an SMB, you have to be more nimble and quicker to adjust. But that’s why you own your own business instead of working for a big corporation like IBM in the first place.