Imagine this. You start your company with this great product or service, and for years, you go along, and it is a top seller — until it isn't.
Sure, there are some products that have been around for what seems to be forever — think Coke, which was invented in 1886. Or how about Stormy Kromer Hats made 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 world's 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 adapted , enhanced and extended their product line or services. Still, others watch as their once bestseller slowly declines. It is hard to think about abandoning something that has been the foundation of a business, but it can make good business sense. So, how do you decide when to stop making something or providing a service? When is it time to enhance a product or provide new features? When is it time to adapt?
Here are a few things to consider.
Follow the money
The biggest surprise to many business owners is that a product they love to make or a service they prefer to offer is no longer appealing to the market. The truth is that products and services have a predictable life cycle . There is a development stage, growth, maturity and decline. It is different for every industry, but unless you make something timeless, such as salt or tobacco sauce, you probably won't make it to the 100-year mark.
When you follow the money and do the work to analyze the sales and margin data, reality sets in. People are just not buying the product or service. It may be a cost issue. Perhaps the rising labor cost to manufacture a product has made your product too expensive. Maybe the price and availability of raw materials make it difficult to produce consistently, and customers are finding alternate products. Unfortunately, many business owners wait too long to recognize the inevitable. The profitability is just not there.
Related: Everything You Need to Know About Exiting Your Business in a Turbulent Economy and Political Landscape
Get ready to change and adapt
The rate of change today is almost incomprehensible. You just think you have settled into a rhythm, only to get jolted by changes in technology, consumer preferences and endless disruptions to the economy. A study about change affecting business found that "overall, across all six factors, the rate of change has risen 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 recent pandemic, my staff wanted to do what we had always done- get on planes and go to customer sites to shoot video.
Many of our customers did not want us onsite but still needed to produce communications. We invested in new equipment and technologies that allowed us to send customers a "virtual studio" kit and then remotely capture and control the video recording. There was a fear on the part of my staff that people would not want us to go onsite when things returned to normal. Some customers were afraid of the technology. In the end, it has 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 necessary, 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 advancements
Many products and services become obsolete because of technology. In my world, we have seen floppy discs, VHS tapes, CDs and DVDs go by the wayside. Think about fax machines, cars that don't require keys, old television sets. "Dumb" phones have been replaced by smartphones. Personal trainers have closed their studios because of online programming. The examples are endless, and it is easy to get lulled into thinking that what you provide is so unique that you won't be impacted by technology. Nothing could be further from the truth.
Staying up with technological advancements is tough. However, there are several blogs that provide good information, and there are online communities that 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 need to 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 danger in being too far ahead. This is especially true for small businesses. If you have to create a market for a new product or service, it can be expensive. That does not mean it can't be done, but it takes planning and a constant eye on current product and service offerings.
When customers start to change their buying habits or simply quit buying, get proactive . Maybe they no longer need what you provide, and it is time to discontinue the product. Perhaps they want more features or different features. It might be time to adapt or enhance a product.
Whatever you do, do not wait until your product is at end of life… or your service is not meeting revenue expectations. You want to stay competitive, and it takes time to develop new offerings or adapt current ones.
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