Yaneek Page | Growing your service-based business in a pandemic
QUESTION: Thank you for your great advice throughout the years. Do you have any tips for growing a service-based business in this pandemic? I actually provide multiple services now, however, I do not want you to publish the details. It was hard to...
QUESTION: Thank you for your great advice throughout the years. Do you have any tips for growing a service-based business in this pandemic? I actually provide multiple services now, however, I do not want you to publish the details. It was hard to grow before 2020, and now it is getting worse, especially with the increased prices all around causing my customers to cut back on some services that carried me through last year. If there is anything COVID taught me it is that we need many different types and sources of business to survive so if one goes down another one is there to keep me going. What is your general advice to move forward?
– D, St Catherine
BUSINESSWISE: It is heartwarming to know that my columns have provided such value to your entrepreneurship journey. Please also accept my sincere congratulations on not simply surviving but your determination to thrive in these times and beyond. You are not alone in this business-growth dilemma.
The majority of businesses operating in Jamaica are small, local rather than export focused, and almost 70 per cent are service based and struggling to grow. We have to take the big-picture approach to solving this growth puzzle.
There are several missing pieces that are key to unlocking lucrative expansion for your business and others. The first and most significant is the choice of industry. Most of the services our small businesses provide have little to do with high-growth, rich-demand areas such as green, renewable, or alternative energy, artificial intelligence, cloud computing, big datal analysis, pharmaceuticals, biotechnology, or logistics.
You are also not operating in any area with mid- or high-level demand, and the return on equity, or ROE, return on assets, or ROA, and return on investment, or ROI, are very low in your industry. It will, therefore, always be a struggle to grow when not investing in industries that yield the highest and best returns on every resource employed. This is the crux of the matter.
You have to go where the money and demand are. In simple terms, if you were to compare the profit and growth potential of a cleaning company to an alternative energy or pharmaceutical company, it would be like pebbles to boulders. As a business owner you have to ask yourself, where is the best place to invest for the best return? And, if I’m not operating in that space, how do I get there? That should be your strategic focus now.
This is why it is said that leadership is the most critical factor in the success of failure of any business. In fact, venture capitalists, angel investors, and others place as much emphasis on the leadership capacity of the entrepreneur as the business model and industry growth and financial projections because business strategy and sound decision-making are what enable businesses to go from good to great.
However, even if you were operating in the most lucrative industry with high growth potential, you would still have to contend with limiting structural vulnerabilities. The other key negating factor in this puzzle, therefore, is the external business environment.
Currency risk, crime, corruption and violence, small population size, low or negative economic growth, and scrawny consumer purchasing power, among others, combine for a noxious cocktail of enterprise stagnation that will continue to have you working twice as hard for a mere fraction of what your counterparts in developed, high-income nations do.
With crisis usually comes opportunity, and the COVID-19 pandemic, which has forced the world into the recession known as the Great Lockdown of 2020, is no different. Now is the time to completely reinvent your business if you are serious about growth.
Unfortunately, your existing business model and strategy appear to provide no solid foundation for expansion. If this is indeed so, then perhaps you may consider with your board, advisers, advisory board or mentor, embarking on a groundbreaking strategic overhaul of your business focused on growth industry (demand, ROI, ROE, ROA), robust target markets, building internal capacity, and business leadership. This is a pivotal moment for your business.
Should you decide on this radical transformation, then building your internal capacity to take advantage of the new opportunities, threats and challenges COVID-19 has unleashed will likely be your secret sauce in mapping your new success journey.
Internal readiness can be broken down into several components – including the business model, financial resources, human resource capacity and innovative capability, technology and equipment, export capacity, and most important, the requisite leadership and management to propel and control every step of the growth process, manage the threat of competition, drive innovations to meet market needs, and adapt to environmental and technological changes.
Finally, remember that service-based businesses need compelling value propositions. Focus on a deep understanding of customer needs and challenges then use that customer and market-centered approach to create that new business model with robust and diverse revenue streams that can drive sustainable growth. Good luck and one love!
- Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series. firstname.lastname@example.org