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Imagine this. You start your company with this great product or service, and for years, you go ahead and it's a best seller—until it's not.
Of course, there are some products that have been around for what seems like forever – think Coca-Cola, which was invented in 1886. Or how about the Stormy Kromer Hats made right here in my home state of Michigan. These hats have been popular since 1908. When it comes to large and well-known financial organizations, JPMorgan Chase & Co. is one of the companies in the world oldest.
There are countless examples of companies, brands and products with a long and rich history. Some have stuck to the original “recipe”. Others have ADJUSTINGexpanded and expanded their product line or services. Still, others watch their once bestseller slowly decline. It's hard to think abandoning something that has been the foundation of a business but can make good business sense. So how do you decide when to stop making something or providing a service? When is it time to improve a product or offer new features? When is it time to adapt?
Here are some things to consider.
Follow the money
The biggest surprise for many business owners is that a product they love to make or a service they prefer to provide is no longer attractive to the market. The truth is that products and services have a predictable life cycle. There is a stage of development, growth, maturity and decline. It's different for every industry, but unless you make something timeless, like salt or tobacco sauce, you probably won't make it to 100 years.
When you follow the money and do the work to analyze sales and margin data, reality sets in. People just aren't buying the product or service. It may be a matter of cost. maybe increasing the cost of labor to produce a product has made your product too expensive. Perhaps the price and availability of raw materials make continuous production and customers difficult are finding alternative products. Unfortunately, many business owners wait too long to recognize the inevitable. The profitability just isn't there.
Be ready to change and adapt
The scale of change today is almost incomprehensible. You just think you've settled into a rhythm, only to be jolted by changes in technology, consumer preferences, and endless disruptions to the economy. or STUDY about changes affecting business found that “overall, across all six factors, the rate of change has increased steadily since 2019 – 183% over the past four years and 33% in the past year alone.”
Change is always difficult. Some businesses are afraid to try something new and prefer to do what is comfortable. During the last pandemic, my staff wanted to do what we've always done – get on planes and go to client sites to shoot videos.
Many of our clients didn't want us onsite but still needed to produce communications. We invested in new equipment and technology that allowed us to send clients a “virtual studio” kit and then capture and control the video recording remotely. There was a fear on the part of my staff that people would not want us to go into the field when things returned to normal. Some customers were afraid of technology. In the end, it's been a great tool and the change allowed us to offer a new way of creating content in specific situations.
For those who create products adding new features can be a way to extend the life of products. If new products are needed, making them backward compatible makes the change more palatable for customers.
Related: Don't let your organization become stagnant – Learn how to innovate with these 5 tips
Watch for technological advances
Many products and services become obsolete due to technology. In my world, we've seen floppy disks, VHS tapes, CDs and DVDs go by the wayside. Think fax machines, keyless cars, old TVs. “Dumb” phones have been replaced by smart phones. Personal trainers have closed their studios due to online programming. The examples are endless, and it's easy to feel comfortable thinking that what you offer is so unique that you won't be affected by technology. Nothing could be further from the truth.
Staying awake with technological advances it's tough. However, there are some blogs that provide good information, and there are online communities you can join.
Related: 10 tech trends that will shape the next decade
Be ahead of the pack
For many years, I have advocated that business owners should be ahead of the pack when it comes to innovation. However, as I wrote in my book, Small Business for Big Thinkers there is a risk of being too far away. This is especially true for small businesses. If you need to create a market for a new product or service, it can be expensive. That doesn't mean it can't be done, but it does require planning and constant attention to current product and service offerings.
When customers start to change their buying habits or simply stop buying, get proactive. Maybe they no longer need what you have to offer and it's time to discontinue the product. Maybe they want more features or different features. It may be time to adapt or improve a product.
Whatever you do, don't wait until your product is at the end of its life… or your service isn't meeting revenue expectations. You want to stay competitive and need time to develop new offerings or adapt current ones.