“Oh My Gosh….Is My Business Obsolete”?
Question: I own a small oil distribution company. Our sales are down over the past year or so. Do you think our business is obsolete or is it on the right side of the trend?
H.T. Rapid City SD
That’s a great question. I’ve been asked this question dozens of times. And it’s one I ask myself all the time. Not only in my business ventures but also those of my consulting clients.
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On the surface, without having a lot of details about your business, I would say you’re on the right side of the trend…which is a small to medium sized business providing a vital commodity or service.
I’ve done several things over the years (successfully I might add) to determine if a product, service or business is on the right side of a hot rising trend. First, I take my blinders off! Here’s what I mean…
Most League of Power Members knew there was a real estate frenzy taking shape around 2005-2007. What’s more, most people secretly knew it would end badly. But only a small percentage of people removed the blinders and took action!
In other words, most entrepreneurs were on the WRONG SIDE of the real estate trend but failed to act. The trend was a bursting bubble value. This meant a foreclosure mania, defaults, and wide spread bankruptcies.
I try to look at things the way they are and not the way I want them to be.
In horse racing “blinders” restrict a horse’s viewpoint so they’ll run without distraction. We’re not animals and we shouldn’t restrict our viewpoint, and so we can rip the blinders off.
Second, history ALWAYS repeats itself! It’s important to look at cycles and history. One way to see cycles in living color is with historical price charts. You can obtain historical price charts for just about anything these days.
Don’t worry. You don’t have to be a mathematician, social scientist or PhD either. Historical price charts are as easy to read as comic strips!
When you look at 20 or 50-year historical price charts for gold, stocks, real estate, electricity, wheat, art, computers, money supply and thousands of other products or services you’ll have a nice picture of where things are at in terms of the long term “cycle”.
In other words, most products, services or business go through the same basic cycle. There will be a period of stagnant growth represented by a flat line. Then as sales and demand increase the line will a rise to a peak. Finally, a top is reached and the product, service or business will eventually fall back and form a flat line again.
Most cycles look like a triangle when you graph it.
For example, here’s a chart of international airline passenger travel through 2005:
Some experts have said airline travel is in decline today. If so this chart may resemble a complete triangle in the near future.
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Spotting hot rising trends can be a handy business skill.
Here’s another example. By using historical price charts there’s a good chance you could have spotted the real estate bust BEFORE it happened:
If you knew the real estate market was going to collapse you could have positioned yourself and benefitted from the trend…which in this case was DOWN.
Third… there’s NOTHING new under the sun! This means although new products, services and businesses are being launched every day (and some of them are really cool). The fact remains there’s nothing new under the sun.
This simply means since the beginning of time people have needed food, shelter, clothing, love, communication, other people, air, water and so on. Someday someone will invent an “Apple Killer”. And when they do iPhones and other Apple products may decline in popularity or lose market share. If you don’t believe me then invest heavily in Apple stock today.
Desktop PC sales are trending down. Computers are not obsolete. But the way we use them is changing – big time. When it comes to making money in business, I think it’s best to focus on existing products, markets and businesses rather than trying to invent something “new” (which is not really new any way!) or reinvent the paperclip.
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I try to look at things the way are not the way I want them to be.
I’m not saying you shouldn’t pursue ideas or markets. But the primary focus should be on existing products, markets and businesses with already have a built-in demand. Have you ever tried to patent a product, service or idea? It’s takes a lot of time and it’s costly.
Google was built on existing product idea…the search engine…and they’ve done pretty good. It’s true. There were dozens of search engines on the Internet when Google was launched. Google didn’t really invent a “new” way to search either. Link popularity already existed. In fact, the concept of “link popularity” was around in the 50’s!
Google simply put an existing idea and formula together differently.
What’s more, some would argue Google didn’t become a household word until they added AdWords advertising to the mix. And Internet advertising was not new!
“How can I tell if my business is obsolete or on the right side of a trend”?
I’ve outlined three ways to determine if a business is obsolete and if you’re on the right side of a trend. If other businesses in a particular sector are losing money and sales there’s a pretty good chance they are on the wrong side of the trend.
For example, take a new auto dealership. The majority of dealerships were losing money or bankrupt after the real estate fiasco in 2007. But new car sales were in decline well before 2007. However, people did not stop driving cars. Smaller, neighborhood used car dealerships became a rising trend in 2005. The trend is still intact today.
Here’s another example….
Traditional book publishing (and sales) has been in decline for years. The bookseller Barnes and Noble may seek bankruptcy protection. This is NOT a hot rising trend. However, ebook and digital publishing, as well as “print on demand” IS a hot rising trend. Amazon’s Kindle ebook reader was the number one gift on Amazon.com in 2010.
Another way to determine if your business is obsolete or if it’s on the losing side of a trend is with common horse sense. But common horse sense is not so “common” these days.
W.C Fields said, “Common horse sense is the thing a horse has that keeps him from betting on people”!
Granted, sometimes you can go “against the grain” and profit. You can also jump on a trend early and profit. But for most entrepreneurs, including myself, it makes more sense to focus on existing products, markets and businesses without trying to be too cleaver.
Back to our reader’s question…..
I think a small oil distribution company is a great niche business, and especially in the current economy. I’d like to know if HT’s business is profitable or if it’s losing money too. If his business is profitable sales is an easy problem to correct with powerful direct marketing.
A lot of people are experiencing extreme hardships in the current economy. But believe it or not some businesses and markets are actually growing, such as:
Advance paycheck businesses
Used car lots
Security products (guns, tasers, alarms, etc)
Small organic and specialty farms
Programming, IT security
Natural health and wellness
eBooks (Kindle sales are off the chart)
Trades (small scale carpentry, electrical, plumbing, well drilling, heating, window replacement, auto mechanics, etc)
The old fable in the classic Acres of Diamonds comes to mind. The lesson of the fable is there are often acres of diamonds in our own backyard.
In my experience, the best money making opportunities are often in plain view. Don’t worry; I’m not going “new age” on you! The best opportunities are usually in plain view.
Now….as far as HT and his oil distribution business, a simple fact remains.
No matter how bad things get people need heating fuel.
The question to HT should ask himself is:
Will my customers do business with competitors because of better pricing, better service or better terms?
You can always look for ways to offer better service and maybe a break on pricing, or financing.
For example, most oil distribution companies offer boiler services. HT could go a step further by offering an annual “Energy Audit” free of charge.
The “Energy Audit” would be an unbiased evaluation of a homeowner’s or business owner’s building. This audit could include specific recommendations for reducing energy consumption.
Be on the lookout for in-kind relationships with companies which offer the services you need, like snowplowing, accounting, direct marketing or dealing with the government.
Granted, most of the barter systems I’ve seen fall short big time. But in a depression, as in good times, legitimate in-kind relationships are crucial.
Here’s something else I’ll throw into the mix…
The companies saddled with debt, unpaid receivables and huge inventories of outdated products tend to be the first to go under when the economy turns south. We should prepare for this BEFORE it occurs. If you have problems in these areas make changes today.
And don’t forget….direct marketing (done right) usually separates the men from the boys when it comes to increasing sales.
I hope that helps!
Your Humble Host,
(Ed Note: Marc Charles is referred to as “The King of Business Opportunities” ….and for good reason. He should be known as “The King of Legitimate Business Opportunities”…because he’s launched, bought, sold reviewed and advised on hundreds of businesses and money making opportunities. He understands legitimate opportunities. Marc has agreed supply League of Power members with crucial updates regarding legitimate business and money making opportunities.)
***** Action Strategy *****
1) Take the blinders off. For example, everyone is negative about the economy. But maybe this is the BEST time to start a business or expand an existing one.
2) Research trends by reviewing historical price charts. You can do this by searching Google Images. Simply enter the terms or chart you want and go! For example, you could search “fast food restaurant historical chart” and you’ll find hundreds of charts.
3) Focus on existing products; markets and businesses with already have a built-in demand. List four or five off the top of your head.
******Valuable Resources *******
“Non-Obsolete” Business Ideas for 2011