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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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Microsoft just Demonstrated Why the Hard Sell doesn’t Work — Again

February 25, 2020 No Comments

Microsoft just undermined its launch of its newly released Edge browser by hard selling it. You may not know about this because it’s niche-worthy news. But, it’s a lesson that the company should have learned many years ago. Instead, it continues to make the same mistake over and over again. Here’s what it is, what it means, and why it proves the hard sell doesn’t work. Why the Hard Sell doesn’t Work Microsoft recently introduced a new version of its Edge browser. In order to promote it, the company shamelessly inserted a conspicuous ad in its Windows 10 menu. The advertisement “suggests” that users switch from their current browser of choice over to Edge. Of course, people don’t like this assertive tactic and are taking to social media to complain about it. Small-business owners successful at sales know the best way to sell something is not to sell it. You listen to potential customers about what they want or need, and then you introduce your product as the answer. You want people to think buying your services was their idea. —American Express Turns out that Microsoft is not willing to learn from its many repeated mistakes of the past. That is, the corporation’s insistence on pushing its customers into buying or using proprietary products and services that are promoted through the company’s various platforms. This is not only annoying, it’s obnoxious. Plus, it demonstrates the many problems with hard selling. There is no empathy, no relationship, no trust, and so it goes against human nature. Trying to badger people into becoming loyal customers is simply not a winning strategy. 3 Proven Ways to Sell without Being Pushy (or Obnoxious) So, how do you promote your products and/or services without hard selling? It’s actually easier than one would think. Better yet, it works and works very well. Here are three effective ways to sell without being pushy or obnoxious: Take your time. Rushing will only backfire. When you sell at a hurried pace, you don’t give your customer enough time to process what you’re offering. It’s confusing and overwhelming and unsurprisingly, it typically won’t work. Let potential customers do all the talking. Well, maybe not all the talking, but most definitely, the majority of it. This way, you’ll learn quite a bit about him or her and gain a better understanding of his or her needs. You’ll be regarded as empathetic and trustworthy and those two key elements are important to building any relationship. Focus on their problem, not your product or service. This goes hand-in-hand with the second point. You need to understand precisely what their problem is in order to offer an effective solution. You won’t be forcing a sale, but rather giving them answers they need. What other strategies do you use in-place of hard selling techniques? Please comment and share your thoughts and experiences! Interested in learning more about business? Then just visit Waters Business Consulting Group.

How Small Businesses Can Harness Moravec’s Paradox for Success

January 30, 2026 No Comments

Solutions to common problems aren’t always self-evident. Sometimes, the answers lie in unusual places. For instance, one contradiction, known in artificial intelligence and robotics circles, states that machines can easily perform very complex calculations quickly, but cannot perform everyday functions that even small children can do effortlessly. This incongruity can actually help small business owners improve their operations and increase their profits. Read on to learn how.

Independent Service Providers are Being Acquired and Local Businesses Can Use this Practice to Their Advantage

July 19, 2024 No Comments

Independent Service Providers are Being Acquired and Local Businesses Can Use this Practice to Their Advantage Did you know your local service providers may not actually be part of an independent, small business? That’s right. The plumber you’ve called before, the electrician you’ve seen working down the street, or even the HVAC tech who has been at your neighbor’s house. While you may recognize their names and logos and think they’re a mom-and-pop organization, they very well be working for a large corporation. For people in the trades, this isn’t news. They’ve known about this for some time. It goes back to the COVID shutdowns when conglomerates realized the true value of “essential” services. These megacorporations recognized the potential earning power of local service providers and began to quietly acquire them. In order to maximize these new assets, the conglomerates allowed them to keep their existing names. But, when people call what they believe is their local service provider, they are really talking to a call center in another state or country. While many independent, small businesses use call centers, the difference is the technicians working for the acquisitions are no longer just trade professionals – they are now salespeople who push additional products and services. The individuals employed by these bought-out companies take the opportunity of their visits to upsell and their customers aren’t aware the familiar mom-and-pop business does not directly employ them. But, it’s not just the fact that these companies are ostensible fronts for selling additional products and services to increase profits for big corporations. It’s also the fact that legitimate small businesses must compete for the same customers. How Independent Businesses Can Take Advantage of Conglomerates Acquiring Competitors to Better Market Themselves Although it may be discouraging to compete against other companies backed by such deep pockets, there are some benefits you as a small business owner can tap into and use to grow your customer base. Yep, small, local businesses can use this trend to their advantage by emphasizing their authenticity and commitment to the community in their marketing efforts. Here are some strategies they can use you can copy in your own community: Highlight your local ownership. Emphasize your business is locally owned and operated by community members who are invested in the area. This can be done through website content, social media posts, and even in-store signage. Also, any vehicles, uniforms, and equipment. Engage with the community. Participate in local events, sponsor community initiatives, and collaborate with other local businesses to demonstrate your commitment to the community. This helps build trust and loyalty among local customers. Personalize your marketing. Use personalized marketing strategies, such as email campaigns, to connect with customers on a more personal level. Share the stories of vendors, employees, and customers to create a sense of community and belonging. Offer unique, local products or services. Highlight any unique products or services that are specific to your local area or that cater to the needs of the community. This can help differentiate your business from larger corporations and attract customers who value local products and services. Leverage online reviews and testimonials. Encourage satisfied customers to leave positive reviews on platforms like Google, Yelp, or social media. Share these reviews in marketing materials to showcase your support of the local community. Maintain a strong online presence. Ensure your business has a well-optimized website, active social media accounts, and accurate listings on local directories and review sites. This helps potential customers find your business and learn more about its local roots and commitment to the community. Offer superior customer service. Small businesses can often provide a more personalized and attentive customer experience compared to larger corporations. Emphasize this in your marketing materials and strive to consistently deliver exceptional service to build a loyal customer base. By focusing on local roots, community involvement, and personalized service, small businesses like yours can effectively differentiate themselves from larger corporations and attract customers who value authenticity and local connections. 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,

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

Microsoft just Demonstrated Why the Hard Sell doesn’t Work — Again

How Small Businesses Can Harness Moravec’s Paradox for Success

Independent Service Providers are Being Acquired and Local Businesses Can Use this Practice to Their Advantage

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