Business Education

The Valuable Business Lessons of 1873, 1893, Mars Music, and Tomorrow

Back in the late nineteenth century, America experienced an incredible economic boom. With the Civil War long over and people moving west, the country enjoyed a boom cycle that lasted nearly a decade. Ironically, this good fortune would sour and become the direct cause of a national crisis.

Throughout history, the business world has been marked by cycles of boom and bust, often fueled by ambition and the allure of rapid growth. The economic panics of 1873 and 1893, along with the rise and fall of companies like Mars Music over a century later, offer valuable lessons for entrepreneurs and businesses today.

Although separated by decades, these historical events share a common thread: the dangers of hasty, unchecked overexpansion. So, let’s take a long look at these pivotal moments, exploring how aggressive growth without a solid foundation can lead to catastrophic outcomes and what modern businesses can learn to avoid similar pitfalls in the future.

The Commonality Between the Panics of 1873 and 1893 and the Collapse of Mars Music

While the Panic of 1873, the Panic of 1893, and the collapse of retailer Mars Music occurred in vastly different historical contexts and economic climates, they share a fundamental commonality: hurried overexpansion and excessive debt.

Both panics were triggered by overindulgent speculation and unsustainable debt levels in various sectors of the economy. In 1873, it was primarily in railroads and manufacturing, while in 1893, it was in railroads, silver mining, and other industries.

Approximately 109 years later, while not on the same scale as the panics, Mars Music’s collapse was also driven by overexpansion and excessive debt. The retailer opened new stores at too rapid a pace, leading to high operating costs and a strain on its financial resources.

Regardless of the specific causes, the consequences of these events were remarkably similar because they all share a common thread: the negative impact of financial instability and economic downturns. These crises highlight the importance of prudent financial management, risk assessment, and adaptability in the face of changing economic conditions.

Slow and Steady Wins the Race: How Businesses Can Grow Sustainably Without Over-Expanding

The rush to grow can feel like a race. Every entrepreneur wants to expand, bring in more profits, and become a household name. But, just like in any race, sprinting too fast can lead to serious missteps. So, how can businesses avoid over-expansion and ensure they grow at a healthy, sustainable rate? Well, there are some things you can do to avoid making such mistakes:

Understanding the dangers of over-expansion. Let’s begin with a simple exercise. Imagine trying to walk on a tightrope while juggling. It’s tough, right? That’s what over-expansion feels like. Businesses that push too hard to grow often spread themselves too thin, losing focus on what made them successful in the first place. This can lead to lower-quality products, unhappy customers, and ultimately, shrinking profits.
Set clear and achievable goals. Goal-setting is comparable to having a roadmap for your journey. Without clear directions, you might find yourself going in circles or heading off a cliff. By setting specific, measurable, and realistic goals, businesses can focus on growth steps that truly make sense. For instance, instead of thinking about opening ten stores at once, aim for one or two first. Get those right, and expand from there.
Know your market inside and out. Think of your market as an ocean. If you don’t understand the tides, you’re likely to capsize your boat. Businesses need to research their target audience, understand their needs, and know the competition. This knowledge helps in making smart decisions, such as when and where to expand. By keeping a close eye on market conditions, businesses can spot opportunities without taking unnecessary risks.
Focus on quality over quantity. In the race to grow, it’s easy to get excited about numbers. But remember, a small number of happy customers is far better than a big number of unhappy ones. Businesses can build a loyal customer base by focusing on creating high-quality products or services. Satisfied customers tend to return and spread the word, leading to organic growth that doesn’t come with the pitfalls of over-expansion.
Keep a close eye on finances. Just as a gardener checks the soil before planting seeds, business owners should keep track of their financial health. Understanding cash flow, expenses, and profit margins can prevent a business from becoming overgrown and unmanageable. By monitoring finances regularly, companies can decide when it’s the right time to invest in growth and when it’s best to hold back.
Invest in employee development. Think of employees as the roots of a mighty tree. Without strong roots, the tree can’t grow tall and wide. Investing in training and development keeps employees engaged and productive. Happy, skilled employees lead to better customer service and improved products, strengthening the business from the inside out. When the foundation is solid, the possibility for expansion becomes much easier to handle.
Embrace innovation gradually. Innovation is akin to adding spice to a dish: too much can ruin the flavor. Businesses should embrace new ideas, but it’s essential to do this gradually. For instance, before launching an entirely new product line, consider introducing an improved version of an existing one. This allows businesses to gauge customer reaction and make adjustments without risking it all on a big gamble.

Last but not least, continually cultivate customer relationships by building strong relationships with customers. It’s all about nurturing connections that promote loyalty. Engaging with customers through feedback loops, surveys, and social media can provide insights into what they love and what needs improvement. This dialogue can guide businesses to grow wisely, responding to customer needs rather than assuming what they want.

The Path to Sustainable Growth

In the end, sustainable growth is all about balance. Just as a well-fed plant needs regular care, businesses thrive with careful attention and planning. By setting achievable goals, knowing the market, focusing on quality, keeping finances in check, investing in employees, innovating wisely, and nurturing customer relationships, businesses can expand without losing their footing. So, take a deep breath, pace yourself, and watch your business flourish.

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How to Turn YOLO into Action

January 10, 2019 No Comments

YOLO — You Only Live Once. It’s true and that’s precisely the reason to give that business idea you have a real go. Really. What you’re waiting for isn’t likely to happen. You have to make it happen. So, let’s get right to it. Why Most Business Start-Up Roadblocks are Imaginary Okay, you need money, right? Wrong. But, you need an extensive business plan. Nope. You need a retail store, an office, a professional space. Probably not. Whatever the reasons, you’re probably talking yourself out of it rather than being thoughtful and careful. There are no limits on who can become a great entrepreneur. You don’t necessarily need a college degree, a bunch of money in the bank or even business experience to start something that could become the next major success. However, what you do need is a strong plan and the drive to see it through. —Entrepreneur.com While thoughtful and careful are good qualities, you need a healthy dose of impulse. In fact, almost every “roadblock” is merely you making an excuse. It’s no more complicated than you making it more complicated. 4 Simple Steps to Start a Business In reality, there are very few steps to start a business. With all the technology at your disposal and a little can-do attitude, it’s entirely possible. All you need is to do the following: Do a bit of research (but not too much). Learn about the product or service and its industry. You don’t need to become an academic expert. Research enough to get acquainted and feel more confident. Although, there’s a point of diminishing returns. If you keep going, you’ll eventually become overwhelmed. In other words, don’t get stuck in the paralysis of analysis or you’ll never actually get started. Test it out in a few different ways first. Whatever it is, test it out and don’t expect to charge — at least in the very beginning. Instead, ask for feedback and listen carefully. Others will give you invaluable input and that’s more valuable than money when starting out. (Now, if someone is willing to pay, give them a nice discount.) Start spreading the word, far and wide. Use social media, your family, your circle of friends, and acquaintances to spread the word. But, don’t hard sell. Just let people know about it. Make changes as you go and learn along the way. More than likely, you won’t hit the ball out of the park at first. You’ll need to make changes as you go. Be flexible and you’ll enjoy the ride a whole lot more. What other advice would you give to people who want to start a business? What motivated you? Please share your experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Disney is Purposely Pricing People Out of its Parks – Should Your Business Follow the Same Strategy?

October 28, 2022 No Comments

Disney has a strategy to increase its bottom line and squeeze more revenue out of its most iconic assets – price people out of its theme parks. This definitely seems counterintuitive, but it actually makes a lot of sense when explained. On its face, this sounds ridiculous, except it does seem to have a lot of potential and that’s why the executives are making some very bold moves. Why Disney is Purposely Pricing People Out of its Parks Disney has a serious problem with its parks – they are just too popular and that means they’re overcrowded. Anyone who’s been to its theme parks, particularly over the last several years, has most definitely noticed this. The predicament is most pervasive in Orlando, where ride wait times have gone up to as much as 420 minutes or 7 hours. You read that correctly. Just last week, its newest and most anticipated attraction, Rise of the Resistance, recorded a wait time of seven hours. This, despite the fact the experience opened in December 2019, nearly three years ago. Be mindful of competitors. If they are raising prices, it’s easier for you to do so too. Don’t forget to evaluate how your customers will react (fully accept the increase, stop, or lower purchases) as well as the possibility of maintaining price to generate higher volume (stealing customers from rivals). If the competition holds steady on prices, there is less opportunity for a hike. —Harvard Business Review And, it’s not just the latest and greatest rides and attractions either. Some of its oldest staples routinely experience wait times in excess of an hour, even two or more. What’s more, wait times for sit-down restaurants can easily be two or more hours for anyone without reservations. (By the way, those reservations must be made three to six months in advance.) Just these anecdotal figures should tell you something – the parks have way too many people visiting. In fact, exiting Main Street in the Magic Kingdom after the fireworks show can take up to two hours to get from the park exit to the parking lot on busy days (a twenty-minute trek when crowds are super light). Of course, anyone who looks at these figures would think that Disney would be very happy with its premium capacity. But, as executives have explained on various earning calls, their per capita spending in the parks is somewhat paltry – particularly among annual passholders. Annual passholders are a problem for Disney because they present a conundrum. While they pay a premium for their privileges, they spend relatively little money in the parks. Conversely, families and couples traveling from out of state or from international destinations spend quite a bit of money in the parks on top of the pricey admission. In other words, annual passholders come in through the gate, spend a few hours enjoying rides and attractions, and then leave. Meanwhile, couples and families making dedicated trips plunk down a lot of money on things like hotels, souvenirs, snacks and dining, and Genie Plus (a paid skip-the-line service), as well as special experiences. Should Your Small Business Raise its Prices Too? For the foreseeable future, Disney will continue to raise its prices on everything: admission, food, merchandise, and services and experiences. The company plans to earn more money from fewer visitors. This brings up an interesting question – should your small business follow the same strategy? If you haven’t raised prices in quite some time and/or offer discounted rates to be out pricier competition, it’s probably a good idea to consider. Plus, if your business needs substantially more customers than your competitors to turn the same profit, it’s definitely worth exploring. To answer these questions and more, speak with an experienced business consultant who can assess your situation and help you determine a new pricing strategy. You just may be losing out on revenue that could be going to your bottom line. Interested in learning more about business? Then just visit Waters Business Consulting Group.

What to Do When Your PPP Money Runs Out

May 7, 2020 No Comments

What do businesses do when their PPP or Payroll Protection Program funds run out? While small companies can apply and receive relief, that money is only finite. It will go just so far before it’s gone. And, once it’s gone, it’s gone for good. Even organizations with business interruption insurance benefits have limited resources. Eventually, the cash will run out. So, what do small businesses do then? PPP Loan Forgiveness Only Solves One Problem It’s important to remember that PPP loan forgiveness — while most certainly helpful — merely solves one problem. Meaning, there are still other debts and obligations to pay and to meet. That alone reveals the fact there’s a lot more to doing business than just compensating employees. Vendors, contractors, and others also need to be paid. The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. —U.S. Small Business Administration This gets to the heart of the larger issue — the inescapable reality of the business world. Put another way, if someone paid off one of your personal debts and you had five, six, or ten more, while that’s a blessing and it’s appreciated, it does not get you totally out of debt. Businesses don’t operate that way because there’s always additional obligations. What to Do When Your PPP Money Runs Out Since businesses stay in a cycle of dynamics, with revolving credit and monthly bills, and they apply and receive PPP money, what can they do once those funds are gone? Here are a few suggestions that might prove helpful to your business: Offer invoice financing. Instead of requesting (or demanding) the entire invoice amount to be paid, give them the option to finance their outstanding balances. You can charge a small fee and/or interest rate — so long that it’s legal and ethical. Ask suppliers for extensions. For businesses that owe other businesses money, it’s worth a shot to ask for some more time or at least try to establish payment arrangements. This will help to take off a little pressure and to free up some cash. Review personnel staffing choices. Most businesses already have or will soon, be forced into this scenario — assessing which team members aren’t essential. It’s a tough spot but because employees most always represent the largest expense, this can’t be ignored. Consider liquidation or selling equipment. Another thing you can do is to sell off non-essential equipment, if available. Or, liquidate some inventory or materials. These are all difficult decisions but they could mean the difference between staying in business and going out of business permanently. Offer new services that are in demand now. Look at what services are in demand now that may be in line with your service offerings or a close extension thereof to provide immediate cash flow. Quickly shift to provide those services by promoting them to your current customer base and use social media to get the word out. Several industries and businesses have done this in recent weeks. 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.