Ed Hatton, a leading South African marketing consultant, cautions: “Just as some anglers forlornly cast their lines into fished-out waters, some companies and sales people continue to focus on markets where nobody is buying any more.
Sales and profitability decline and business owners blame downgrades, corruption and labour issues, while their real problem is chasing non-existent sales.”
This year has been tough for many Kenyan firms. Already many listed companies have posted significantly low profit or have issued profit warning ahead of full year reports. Small firms without reserves and financial muscles are hardest hit.
Although it is understandable to blame external factors such as long electioneering period, political uncertainties and interest rate capping, some firms’ decline has nothing to do with them.
As Hatton points out, it is important to do your homework well to establish what is really ailing your firm so that you can get the right cure.
The “malady” could easily be different from what people are blowing whistles about. Clearly not all businesses are affected by the above factors.
If your competitors are doing well and you are doing badly, then probably your problems are internal. Your weaknesses could be the way you manage your resources such as finances, personnel and production processes.
The big question is, could you be chasing dwindling customers or investing in declining sectors?
The traditional business model is facing the greatest threat from modern types fuelled by technology. As a business person you need to keep a watch on what is happening in your sector. You have to keep up with times or be edged out.
It is said that if you realise you are riding on a dead or dying horse the best decision is to dismount, not to flog it harder. If you are in a declining sector, when sales plummet, the best decision is not to double your sales force or increase products to maintain sales revenue.
Wisdom demands you know when to quit or embrace technology or innovation to supply your customers with what they need.
It is also extremely important to closely monitor your customers businesses, especially if you supply to them on credit. This is because if they are operating in a declining sector or they have cancerous management problems, soon they will not be able to pay and you will follow them downhill unless you take action.
Some firms have gone down with billions of suppliers who failed to see the signs of decline either caused by internal or external factors. In this sense, your customer’s problems become your own unless you disengage early enough.
This article was first published in The Business Daily on December 4, 2017.