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.

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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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Trump Clinton Obama Spying Teach a Great Business Lesson

June 7, 2017 No Comments

If you follow the latest news, you no doubt know there’s a lot of allegations about spying. And, you’ve definitely heard the word “collusion” all-too-many times. It’s post-election politicking at its worst (or best, depending on your perspective). Anonymous sources are spilling the proverbial beans day in and day out. Regardless of your take, all of this does teach a solid business lesson, you just have to look past the ugliness. That lesson is how to protect company secrets, particularly when employees depart. How to Protect Company Secrets after Employees Leave One of the best measures is to get to know all your team members so you can keep them happy. You might learn it’s time to transform your company’s culture or take other steps to improve the environment. The more involved you are with your employees, the better able you are to deal with problems before they arise or before they become overwhelming. This way, if you have a new hire who is willing to share information about a previous employer, you’ll know that’s a possibility when he or she leaves. Ever wonder why generic forms of cola never seem to taste quite like the taste made famous by Coca-Cola brand? Or why nothing quite measures up to the “special sauce” in a McDonald’s Big Mac? It’s not for lack of effort by way of competitors, but instead, a careful product of some of the best-kept industry secrets. While many industries basically work to reproduce the same type of product in different forms, what helps a company distinguish itself from its competitors, gain notoriety, and keep a competitive edge is the little known inner workings that make their products or services stand out from the pack. —Business.com It’s also a great idea to get to know your team members because then you can learn about them as individuals. This is a wonderful way to know what rewards are most appreciated. And, content employees are typically more loyal. On the other hand, employees who are kept at arm’s length tend to be more disgruntled. According to a Ponemon Institute study, 61 percent of unhappy team members steal company information. But there are other steps you can take to protect company secrets, even after employees leave your organization: Set expectations. “It’s better to be safe than sorry,” the old adage warns. And, this is true when it comes to keeping company secrets. You have to ask yourself about what’s most valuable to your business and that’s what needs top priority protection. This starts by setting expectations and keeping employees informed about company confidentiality policies. If necessary, have employees sign non-disclosures so they are less tempted to share secrets. Utilize technology. In today’s modern technological environment, there are plenty of tools at your disposal. Use them to your advantage so there’s less access or blocked access where it’s appropriate. For instance, if you are developing a new tool, salespeople should not have access to the plans but designers should. Put technology to work where needed and that will help to minimize potential risk. Monitor employees. You can also use technology beyond controlling access. Monitoring employees can be a treasure trove and provide much appreciated relief. For example, if a team member is about to leave and is actively interviewing with other companies, monitoring their digital activity might be worthwhile. Cut off access quickly. Although it’s not pleasant to think about, when an employee departs, unless it’s on truly amicable terms, there’s a risk something that could go with them, carried right out the door. So, be sure to terminate access right away to remain safe. How do you keep trade secrets? What steps do you take to protect company secrets? Please share your thoughts and experiences by leaving a comment! Interested in learning more about business? Then just visit Waters Business Consulting Group. [shareaholic app=”follow_buttons” id=”26833294″]

Ways to Build Strategic Partnerships

May 16, 2017 No Comments

There are many ways to build a business, and few are as powerful as establishing strategic partnerships. Ideally, these create win-win scenarios where both parties benefit. The problem with such relationships is they can become more of a burden than a help, particularly when rushed, or, when done with disregard for others. Savvy business owners know the benefit of strategic partnerships, forging an alliance with another entity to provide more products and services to their customers. In fact, a 2014 survey conducted by PricewaterhouseCoopers revealed that in excess of 80 percent of CEO’s looked to create such relationships. However, the sad fact about these partnerships is that a 65 percent were actually successful, so, 15 percent of those did not work out. Ways to Build Strategic Partnerships Strategic partnerships are generally sought in order to expand without the cost of an actual expansion. It allows entrepreneurs to tap into resources with existing structures and increase their books of business. Unfortunately, empirical data shows that half of these business relationships fail. The reasons are many, but it can be avoided if you take the necessary precautions. The formula for a successful strategic partnership may seem easy: 1 + 1 = 3. Indeed, partnerships are a proven way to boost the bottom line. American Express surveyed small businesses in government contracting and found that those who teamed up won 54 percent more prime contracts than average. But creating effective alliances is not always so easy. Partnerships gone wrong can lead to frustration, financial losses and even litigation. —Success.com Of course, no amount of caution or preparation guarantees things will work out without a hitch. Small businesses can really benefit from strategic partnerships, but to do so, you have to establish a good rapport and be transparent as to your wants, needs, as well as expectations. Here are some ways to build strategic partnerships that will help your company grow while benefiting your business partner: Know and quantify your abilities and resources. One of the worst decisions to make is to form a strategic partnership without being able to fulfill your obligations. You certainly don’t want to crack egg all over your face. So, don’t put yourself in such a position and know precisely what you can bring to the table and be upfront about it. Even if you can patch together enough to deliver when necessary, you don’t want the stress that comes with this kind of a situation. Be very clear on your “why.” Another huge, colossal mistake, that business owners make is forming partnerships simply to increase their bottom lines. While that is definitely part of the equation, if you don’t go into a relationship with selfish service in-mind, you’re setting yourself up for big time disappointment. Ask yourself honestly why you want to form a business relationship. If you can’t find an answer other than money, you’re eventually going to sabotage your own efforts. Ask for reasons why potential partners want to connect.What’s true for you is just as true for potential partners. Don’t be afraid to ask penetrating questions to get at the truth. If you discover he or she is on a one-way self-serving mission, you definitely need to pass. Seek those with a shared vision and value system. Take it a step further than just asking questions and get to know him or her before you partner. Build a relationship and during that time, you’ll learn their vision and values. Go slow, learn, and take the time necessary to make the right decision. In addition to these, don’t expect miracles to happen after you form a strategic partnership. In fact, you ought to expect to be uncomfortable from time-to-time by getting out and meeting with your strategic partners face to face. There’s just no way to hedge against every possible contingency, but fostering and developing positive relationships will build trust and eventual business between the strategic partners. Want to find out about what a business coach can do for you? [shareaholic app=”follow_buttons” id=”26833294″]

How to Manage Your Teleworking Staff

April 9, 2020 No Comments

Managing a staff remotely presents a number of challenges, some of which are completely unexpected. When a business first goes to a telecommuting or teleworking structure, it naturally undergoes some growing pains to adjust to the new dynamic. Although it is ostensibly more beneficial, cutting down on some expenses, and providing more convenience to staff who no longer have to commute, there are still some issues which can arise. So, it’s best to know what to expect. The Upsides of Telecommuting for Small Businesses There are a number of advantages to remote work situations. It gives team members more flexibility with their schedules. Also, it cuts down, if not nearly eliminates, office politics. Additionally, another benefit is that it can reduce operating costs, having to rely less on a dedicated, physical location. Particularly for small businesses, telecommuting seems an effective strategy for maximizing a workforce while still keeping costs low. You don’t need to pay for a centralized office space or deal with a drive to work, but you do have to contend with YouTube, Facebook and myriad other online distractions. —American Express But, it also means having to wrangle with coordination efforts, relying on different forms of communication, along with various other things to work out. With just a bit of tweaking here and there, it’s possible to make it work and even to reach a point where pretty much everything flows seamlessly. Ways to Manage Your Teleworking Staff Of course getting from Point A to Point B requires a combination of ingenuity, cooperation, and some out of the box thinking. To effectively manage a remote staff, you’ll need to do the following: Clarify roles. Each team member must clearly understand his or her role within the organization to eliminate duplication of effort, gaps in productivity, and more troublesome issues. Every person should have a defined, central role, as well as alternative responsibilities, just in case there is a need. Set expectations. In addition to defining everyone’s role, you’ll also need to clearly delineate your expectations. Otherwise, people won’t know exactly what you want out of them, and that’s a recipe for disaster. Develop procedures. It’s pretty straightforward to set up and explain and demonstrate procedures in a face-to-face environment, but presents quite a challenge with remote staff. This is where most of the initial communication will be necessary, in order to coordinate how things should be done. Set Regularly Scheduled Conference Calls. Regular communication is key with your staff in order to develop relationships and high trust cultures with accountability. Have a set time and day with a set agenda on key performance metrics and results, project updates, review current challenges and opportunities and collaborate openly so that there is a sense of community. Use a video conference application like ZOOM or GoToMeeting.com or other for more effective communication. Understand security issues. With remote work comes the risk of work-product being compromised. You need to learn about and address any potential issues by being proactive as possible. Reach out for help when needed. Lastly, if things just don’t seem to work, you should seek help with the right people. you might need to consult or hire a technical professional in order to get everything you need in order for the system to be fully functional. What other suggestions do you have? Please, share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.