Business Education

Economists Call It Induced Demand, Entrepreneurs Refer to It as a Learning Curve – But the Lesson is the Same

Economists Call It “Induced Demand,” Entrepreneurs Refer to It as a “Learning Curve” – But the Lesson is the Same

Decades ago, California attempted to alleviate and lighten heavy traffic congestion on its highways by adding more lanes. Upon completing construction, the new thoroughfares opened, and, congestion significantly dissipated. Then, gradually, traffic became heavier and heavier. Eventually, the very problem the state tried to tackle returned, but there were more vehicles than before, and traffic moved even slower. The new travel lane additions didn’t solve the problem – they only made congestion worse.

Economists call this phenomenon “induced demand.” This term is a fancy way to say it entices and causes more people to use something. The concept of induced demand, first proposed by economist Anthony Downs in his 1982 book “Stuck in Traffic,” suggests that increasing road capacity may not diminish traffic congestion due to the Triple Convergence Theory. This theory posits that new capacity attracts three types of travelers: those who change routes, those who adjust their travel times, and those who switch modes of transportation to driving. These shifts in behavior lead to increased usage of the new capacity, negating the intended benefits of reduced congestion.

The lesson in the California road expansion project is simple – the state planned based on theory and had little to no quantifiable data that widening the highways would work. Although it seems perfectly logical to add additional lanes to lessen traffic congestion, the reaction by motorists wasn’t fully considered. And, it’s this very intention that can land entrepreneurs into considerable trouble.

Why Entrepreneurs Should Carefully Experiment Before Fully Committing

Growing a business can be a challenging process, and it’s easy to make mistakes that can cost time and money. So, you need to be prepared and understand a few things before you attempt to move forward. Now, here are some strategies entrepreneurs can use to avoid expensive or time-consuming mistakes when growing their businesses:

Start with thorough market research. Before expanding, conduct detailed market research to understand your target audience, competitors, and industry trends. This will help you make informed decisions and avoid costly mistakes.

Then, take the time to develop a solid business plan. Create a comprehensive business plan that outlines your growth strategy, target market, financial projections, and potential risks. This will help you stay focused and make better decisions. Next, learn to lean on your strengths and do the following:

Focus on your core competencies. Stick to what you do best and avoid diversifying too quickly. Expanding into new markets or products can be risky and expensive.
Invest in technology. Leverage technology to streamline operations, improve customer experience, and increase efficiency. This can help you scale your business without incurring significant costs.
Build a strong team. Hire the right people and invest in their development. A strong team can help you avoid costly mistakes and drive growth. Remember, to succeed, you need to rely on others to help you accomplish your ultimate goals because you can’t do it all on your own.
Monitor cash flow. Keep a close eye on your cash flow to ensure you have enough money to cover expenses and invest in growth. Try to avoid debt as much as possible. The less you owe, the more options you’ll have. Freeing up resources will do wonders when you experience leaner times.
Be agile and adaptable. Be prepared to pivot your strategy if market conditions change or if you encounter unexpected challenges. Unfortunately, too many entrepreneurs become stubborn and refuse to make adjustments, typically leading to unpleasant results.
Learn from mistakes. Use mistakes as learning opportunities and adjust your strategy accordingly. When you do this, you’ll build a healthy habit. One that will allow you to reevaluate situations and change direction to avoid bad results.
Seek professional advice. Consult with experts, mentors, or advisors who can provide valuable insights and guidance. It’s highly advisable to speak with an experienced business consultant who can provide you with the right advice.

And obviously, stay organized and focused. Keep track of your progress, set clear goals, and stay focused on your priorities.

By following these strategies, entrepreneurs can avoid expensive or time-consuming mistakes and increase their chances of successfully growing their businesses.

Want to Accomplish More?

Do you want your company to grow faster and earn more while you spend more time with your family doing all the things you started your business to do?

We can make that dream a reality. Give us 30 minutes and we will show you how to get your life back. Skeptical? Good! Put us to the test.

You can call us for your free appointment at (602) 541-1760, or, if you prefer, Waters Business Consulting Group to learn more about us and the services we offer.

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Personality Hires Spark a Big Social Media Debate. Here’s What Small Businesses Need to Know

July 10, 2024 No Comments

Personality Hires Spark a Big Social Media Debate: Here’s What Small Businesses Need to Know Personality hires have recently become a popular topic on social media. While there are numerous reasons, perhaps the biggest is the concept resonates with many people, particularly younger generations like Gen Z, who often feel that they bring value to the workplace through their interpersonal skills and positive energy, even if they may not have extensive technical skills or experience. This launched a trend where individuals celebrate being “personality hires,” often in a humorous or self-deprecating manner, sharing their experiences and insights on platforms like TikTok and Twitter. Also, the rise of remote work and changing workplace dynamics have made the concept of personality hires more relevant. As companies focus on building strong team cultures and maintaining employee engagement, the value of employees who can foster positive relationships and boost morale has become more apparent. This has sparked discussions about the importance of hiring for cultural fit and soft skills, in addition to technical abilities. What to Know about Personality Hires As stated above, personality hires refer to the practice of hiring employees based on their personal traits, interpersonal skills, and cultural fit, rather than solely on their technical skills or experience. This approach emphasizes the importance of an individual’s personality in the workplace, as it can significantly impact team dynamics, collaboration, and overall company culture. Pros of Personality Hires This isn’t a completely new concept. But since it’s a decidedly different approach than traditional thinking, it can be difficult to see the benefits. So, let’s take a look at some of the advantages these job candidates can bring to the table and why they could be a good fit for an organization: Enhanced team cohesion. Employees with compatible personalities often work better together, reducing conflicts and improving team dynamics. A personality hire can help foster a positive and collaborative work environment. Improved relationships and communication. Personality hires are typically good communicators and can help improve relationships among team members and between employees and management. This can lead to better collaboration and problem-solving. Adaptability and learning potential. Candidates hired for their personality traits, such as openness, adaptability, and eagerness to learn, may be more effective in growing into their roles and taking on new challenges compared to those selected solely for their current skill set. Reinforcement of cultural norms and values. Hiring for personality allows organizations to reinforce the cultural norms and values that make them unique, fostering a workplace where employees are aligned with the company’s core beliefs and behaviors. Additionally, personality hires offer the potential for a new way of approaching an industry. These individuals may perceive things differently and be able to take a novel viewpoint no one else has thought of before. Cons of Personality Hires Now, as you well know, there are downsides to any proposition. Sure, this could bring a small business plenty of great experiences but it’s important to be aware of potential problems that could come from personality hires, like the following: Risk of skill gaps. Focusing too much on personality might lead to overlooking essential skills or technical deficiencies, potentially resulting in performance issues if the hire cannot meet the technical demands of the role. Overemphasis on likeability. There’s a risk that highly likable candidates may be favored over more qualified ones, which can impact the overall productivity and effectiveness of the team. Potential for bias. Personality-based hiring can introduce bias into the hiring process, as it relies heavily on subjective judgments about an individual’s character and fit within the organization. Conflict among team members. Personality hires can sometimes create tension or conflict within the team, especially if their personality traits clash with those of other team members. Small businesses should carefully consider the pros and cons of personality hires when making hiring decisions. While personality hires can bring considerable benefits to a workplace, including improved team harmony and cultural alignment, it is crucial to maintain a balanced approach. By carefully blending personality assessments with skill evaluations during the recruitment process, organizations can ensure they not only hire employees who fit into the workplace culture but who are also well-equipped to contribute to the company’s success. Ultimately, small businesses should prioritize hiring individuals who possess a combination of strong technical skills and a compatible personality that aligns with the company’s values and culture. Want to Accomplish More? Do you want your company to grow faster and earn more while you spend more time with your family doing all the things you started your business to do? We can make that dream a reality. Give us 30 minutes and we will show you how to get your life back. Skeptical? Good! Put us to the test. You can call us for your free appointment at (602) 541-1760, or, if you prefer,

How Established Businesses Can Smartly Break into Emerging Cottage Industries

September 22, 2023 No Comments

How Established Businesses Can Smartly Break into Emerging Cottage Industries The business landscape is constantly evolving, and emerging cottage industries are a testament to this incredible dynamism. These small-scale, niche markets often represent new opportunities for both startups and established businesses alike to explore. However, established businesses face unique challenges when entering emerging cottage industries. So, let’s go ahead and take a look at what to expect. Why Established Businesses Should Consider Entry Obviously, existing companies with a solid customer base would expect to grow their profits by getting into new spaces. But, there are other advantageous motivators. For instance, established businesses should consider entering a new cottage industry for several compelling reasons: Diversification. Entering an emerging cottage industry can diversify an established business’s product or service portfolio, reducing reliance on a single market. Growth potential. These industries may be in their infancy, offering significant growth opportunities for early entrants with proven business skills. Consumer trends. Many consumers prioritize local, artisanal, and sustainable products, making these markets attractive for established businesses. Plus, getting into a cottage industry can create a competitive advantage. Entering early can establish a strong foothold, making it difficult for competitors to catch up. Strategic Ways Established Businesses Can Enter New Cottage Industries Emerging cottage industries are small, niche businesses that are often based on traditional skills or crafts. They are usually started by passionate individuals who are eager to share their products and services with the world. Established businesses can see a number of benefits to breaking into emerging cottage industries. These industries can offer new opportunities for growth, innovation, and differentiation. They can also help established businesses to connect with new customers and markets. However, there are also some challenges that established businesses need to be aware of when breaking into emerging cottage industries. These industries are often highly competitive, and it can be difficult to gain a foothold. Additionally, established businesses may need to adapt their business models and strategies to succeed in these new markets. Here are some tips for established businesses on how to smartly break into emerging cottage industries: Do your research. The first step is to identify emerging cottage industries that are relevant to your business and that have the potential for growth. Once you have identified a few potential industries, research them thoroughly to understand the trends, the competition, and the customer base. Identify your niche. Once you have a good understanding of an emerging cottage industry, you need to identify your niche. What unique value proposition can you offer to customers in this market? What products or services can you provide that no one else can? Partner with existing businesses. One of the best ways to break into an emerging cottage industry is to partner with existing businesses in that industry. This can give you access to their customer base, expertise, and resources. Invest in marketing and branding. It is important to invest in marketing and branding to build awareness of your business and your products or services in the emerging cottage industry. Make sure that your marketing and branding are tailored to the specific needs and interests of your target customers. Be patient and persistent. It takes time and effort to build a successful business in any industry, but it is especially important to be patient and persistent when breaking into an emerging cottage industry. Don’t expect to see results overnight. Entering emerging cottage industries can be a rewarding venture for established businesses. With thorough research, strategic adaptation, a commitment to authenticity, and a long-term vision, these businesses can successfully navigate and thrive in these promising markets. By understanding the unique dynamics and values of cottage industries, established businesses can harness new growth opportunities and stay ahead of the curve in an ever-changing business landscape. Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer. You can phone 602-435-5474 or send us an email.

7 Challenges Every Bootstrap Entrepreneur Faces

May 16, 2017 No Comments

The entrepreneurial experience is one of duality, a paradox, that’s both exciting, full of hope, and, anxious, stymied by fear. Two very different states of mind and emotion, however, in the majority of instances, one set is preceded by the other. It comes with that spark of the proverbial, “ah ha!” moment–excitement and genuine, heartfelt belief that whatever it is, it will work. Often, this elation is short lived and it’s little wonder why. We grow-up with expectations and more than enough are not fulfilled. So, we learn skepticism, caution, and to examine our actions before blindly leaping. This is precisely why extreme success stories remain so unfathomable–often accompanied by the phraseology, “against all odds.” These sets of circumstances cause us to look at those odds and be honest about the entrepreneurial journey, which more often than not, requires a lot of work, much dedication, and, the ability to see and believe what others don’t. 7 Challenges Every Bootstrap Entrepreneur Faces When you start your own business, it might be a side gig, something that only takes a few hours out of your week and is intended to grow incrementally. It could also be the resort of finding yourself suddenly unemployed and the opportunity to take control of your own future provides all the drive necessary to start and never look back. Others partner together and use old fashioned sweat equity to get their businesses off the ground. Whatever the case might be, there will be obstacles. Regardless of size, most businesses face many of the same challenges every day. Maximizing profits, minimizing expenses and finding talented staff to keep things moving seem to be top challenges for both SMBs and large corporations. —Entrepreneur.com It might come as a surprise, but new companies fail for two primary reasons: too little business, and, too much business. In the former instance, there’s obviously a lack of revenue; but, the latter seems counterintuitive, perplexing, though perfectly explainable–overwhelming demand. These dynamics are usually out of the company’s control but there are others, and, just one of these can be enough to cause failure: Stability. While you might have a marketable and sellable idea, possess the talent to sell it, and have enough resources to get it out there, you don’t control the economy. Being employed provides a sense of security, though arguably, it’s a false one. There is no guarantee your vision will come to fruition in the way you now imagine it, or, at all. Income. It’s a fact that many entrepreneurs don’t take any salary for the first several months, even for a year or more, because the money’s better spent rolled back into the business. Having to forego a steady income, even temporarily, can be too much to bear for some, it’s looking to the future and taking stock of gains that provides the remedy. Sustainability. The marketplace changes and some businesses become near or completely obsolete. In the wake, new opportunities emerge, but that doesn’t undo the damage suffered by those caught on the wrong side. Pivoting when times begin to change is a necessity to embrace. Comfort. One thing that seems strange is what’s obvious by its absence–being the boss. Sure, it will be you who’ll be in charge, which means you will be making the tough decisions, you will be the one responsible for company mistakes, and you who must put your foot down. Schedule. Your work and personal lives will intersect many times during your startup period and here again, it’s because you’re the boss. While you’ll have set boundaries, you’ll have to do so smartly and be flexible. Sleep. Lying awake, brainstorming, putting in a lot of extra hours to get something done, having to meet this deadline or be present for a meeting, all of these are common. Try to find a schedule that largely works and take advantage of downtime. Seventh on the list is confidence, and, it’s among the most powerful of influencers. Your confidence will be challenged many times, but this just comes with the territory. You will have doubts, falter, and make miscalculations, but these are only as hurtful as you allow. Finally, if you have a viable business model with a demand for a product or service, then much of your success falls on you ability to persevere. Many businesses fail or fall “three feet from gold” because the entrepreneur quit. In the toughest of times, I encourage my clients, as I did for myself, to take Action every day on something that will help to grow your business. Sitting, worrying or praying does no benefit without Action. And, Action helps to resolve anxieties and fear. So, go out and pursue our dream today, and take Action every day to building your business! [shareaholic app=”follow_buttons” id=”26833294″]

Economists Call It Induced Demand, Entrepreneurs Refer to It as a Learning Curve – But the Lesson is the Same

Economists Call It “Induced Demand,” Entrepreneurs Refer to It as a “Learning Curve” – But the Lesson is the Same

Why Entrepreneurs Should Carefully Experiment Before Fully Committing

Want to Accomplish More?

Like this article?

Related Posts

Personality Hires Spark a Big Social Media Debate. Here’s What Small Businesses Need to Know

How Established Businesses Can Smartly Break into Emerging Cottage Industries

7 Challenges Every Bootstrap Entrepreneur Faces

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