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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2 Strong Signs You’re Actually Successful, Even if You don’t Believe It

October 21, 2018 No Comments

What does success look like? More particularly, what does success feel like? These are, of course, quite objective. But, there are some signs you’re successful, even if you don’t particularly believe it yourself. It’s always worthwhile to take stake in where you stand — especially when you feel as though it’s less than inspiring. 2 Strong Signs You’re Actually Successful, Even if You don’t Believe It Aside from the hard numbers, how do you know you’re successful? Sure, you can always look at the books and see the bottom line. However, these figures don’t tell the whole story. One such example is when you feel comfortable that you can’t change everything but do change what you can. We’ve all experienced those days when we feel like an absolute failure. It’s a normal feeling when things don’t go as exactly planned. And, when we feel like that, it’s challenging to think of yourself as a successful individual. Here’s the thing about success though – no one can agree what that word means. Even though we all have our own definitions of success, there are also a number of signs that we’re overlooking that can let us know that we’re actually more successful than we could have ever guessed. —Inc.com Or, if you don’t feel stressed out at every bump in the road. People who aren’t struggling just don’t usually sweat the small stuff. It’s really that simple. When you’re making it, little setbacks are regarded as valuable lessons and not nightmare scenarios. Top 3 Signs You’re Making It, Even if it Doesn’t Feel that Way Now, if those don’t apply to you, let’s take a look at a few more telltale signs you’re actually making it — even if it doesn’t quite feel that way: You see the bigger picture. When your focus is large in scope, you are able to think more clearly. Which means you look into the future instead of fretting on every little component in the now. In other words, you’re more comfortable with the bumps along the way because you know it’s just part of getting to the next goal. You feel excited to keep at it. If a person feels excited to keep on with their role, there’s definitely a reason for that. Fulfillment is a sure sign that you’re successful. Otherwise, you’d feel quite different, more pessimistic and gloomy. And, you most assuredly wouldn’t feel energized or enthusiastic about your role. You look forward to the next challenge. Another sign you’re successful is you’re looking forward to the next big challenge in the future. After all, you’ve had to achieved a level of success in order to get to this point. In other words, you’ve had to racked up some successes in the past because there’s still more to go. What other signs of success do you think go unnoticed? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Business Owners, it’s Time to Stop using Covid as an Excuse

May 14, 2022 No Comments

Covid isn’t over. In fact, the virus is probably here to stay for a long, long time, perhaps forever as endemic. But, the worst is likely well behind us. However, some small business owners are using the pandemic as an excuse and customers aren’t buying it. This is because consumers are well aware of what’s really going on and do not take kindly to such unbelievable explanations. So, it’s time for small business owners to stop using Covid as an excuse. Now, let’s take a look at why it’s so damaging. Excuses are Bad for Business Small business owners have a lot on their plate. They are responsible for wearing many hats and often have to do everything themselves. This can lead to some owners making excuses to their customers when things don’t go as planned. While it may be tempting to do this, it’s important to remember that there are many consequences for doing so. This is because there are compelling reasons why small business owners should never make excuses to their customers. Business experts wince at pandemic excuses because, well, they’re excuses, which are not the bailiwick of successful entrepreneurs—who are, by definition, problem solvers. Although tossing off a Covid excuse may seem benign, it creates a messaging problem because it’s likely deceitful: Customers are now savvy to the fact that supply chain, safety, and staffing challenges are well-established market conditions—not sudden pandemic blows. —Bloomberg Business Remember, customers will accept difficulties for what they are. They understand some situations are simply beyond a small business’ control. But, when others in the industry are moving forward, meeting their customers’ needs, it becomes dangerous for entrepreneurs to make excuses. Why Small Business Owners Shouldn’t make Excuses to their Customers Covid has become the proverbial “dog ate the homework” excuse. Sure, it is possible, but it’s also growingly becoming improbable. In other words, sure, the pandemic and shutdown may have lingering effects. But, to apply it capriciously is just a bad business practice. Some of the reasons why small business owners should never make excuses to their customers include: It harms credibility. When a small business owner makes an excuse to a customer, they are essentially saying that they are not capable of handling the situation. This can cause the customer to lose faith in the small business and may never use their services again. Businesses can suffer a bad name. If a small business is known for making excuses to their customers, it will not be long before word gets out. Customers will start to avoid doing business with them because they know that they will not be able to count on them to deliver what they promise. It makes owners appear ineffective. When a small business owner makes excuses to their customers, it makes them look like they are not in control of their business. This can lead to the customer questioning the owner’s ability to run their business and may cause them to take their business elsewhere. Customers may never return. If a small business owner regularly makes excuses to their customers, it is only a matter of time before they start losing them. Once a customer has had enough of being lied to, they will take their business to competitors who deliver and may never come back. As you can see, there are many reasons why small business owners should never make excuses to their customers. While it may be tempting to do so in the moment, it is important to remember that the consequences can be very severe. If you are a small business owner, do your best to always be honest with your customers and never make excuses for your mistakes. Your business will be better off in the long run. Do you have any tips for small business owners on how to avoid making excuses to their customers? Please, take a moment to share your thoughts and experiences so others can benefit from your input! Interested in learning more about business? Then just visit Waters Business Consulting Group.

How to Deal with a Client Who Keeps Breaking their Promises

September 3, 2020 No Comments

What do you do with a client who keeps breaking their promises? It’s certainly not an easy problem to solve. And, even more difficult when you come to the realization you’re a bigger part of the issue than you originally thought. As is the case with so many complicated circumstances, you probably share a good amount of fault. That isn’t to excuse the promise-breaker. But, it does serve as a reminder that it takes two people to take responsibility. About Promise-Breaking Clients It’s a more common phenomenon that you might believe. Not that it’s justified or even reasonably expected. However, clients have many reasons why — yes, some are excuses — for not following through with their word. It could be something beyond their control. Or, just a change of heart (and perhaps, circumstances). It’s an old rule of life that we teach people how to treat us. Yet often we can struggle when it comes to managing accountability and calling people on broken promises. It just feels like less stress to say nothing; even to just do it ourselves. But here’s the deal: when you decide not to call someone on their broken promise and ill-managed commitment, you’re, albeit inadvertently, being part of the problem. —Forbes.com Regardless of how often it happens, it does happen. So, that’s something you should be prepared for, because eventually, you’ll run into it. Usually, it’s not out of malice or selfishness, but rather, unrealistic expectations. When it does happen, you should know how to respond. How to Deal with a Client Who Keeps Breaking their Promises There’s an old saying in the real estate sales industry, “Buyers are liars.” It comes from a modicum of truth, but is obviously more of an exaggeration. Although, it does point out how people tend to embellish or overstate their resources and intentions. If you have a client who doesn’t always follow through on his or her promises, try these suggestions: Remind them. The first time won’t be the last. So, let him or her know what you expected and that you’ll expect them to deliver in the future. You don’t have to be rude, just stern but kind. If you show you’re willing to call them out, he or she will be less likely to do the same again. Don’t make up for them. It’s tempting to pick up the slack yourself but that rewards their behavior by avoiding consequences. After all, you value your reputation and take pride in your work. So, you make up for the short fall. But, this will only backfire. You’re only teaching him or her you’re always there to make things right. So, they don’t have to worry about it. That will only lead to more trouble. Don’t stay vulnerable. This is the most difficult, though it’s sometimes unavoidable. If it happens more than once and you don’t say anything, expect it to keep happening. Conversely, if you let them know you’re not going to tolerate his or her behavior, you can help break the cycle. What other suggestions do you have for dealing with a client who breaks their promises? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.