The Australian Bureau of Statistics noted that in 2011 there were 2.1 million trading businesses in Australia and 96% of them were considered small businesses. Anecdotally, there is probably another 30% increase on these numbers in todays terms, but the question I ask is what percentage have closed their doors in the last five years.
The majority of jewellery businesses in Australia are independents and are more than five years old, however, how many will survive the next five years? I pose this question because never before have we seen such a massive change and disruption when it comes to people’s buying behaviours. I had a recent conversation with a manufacturing retail jeweller who told me that he has literally one person a week asking him to verify the quality of the diamond in the ring that they purchased online. From my own experience, I purchased an item on Ebay at 3pm yesterday and at 11:30am the next day it was delivered to my office and I work in the heart of the city. I could have walked 2mn to a shop. This is the new reality, I didn’t want to walk through a shopping centre or search the shelves of a department store or look around for a salesperson who more than likely has little to no knowledge about the product itself.
So what are the tools, the perspective, the strategy the headspace that we need to have, so as to ensure that we don’t just survive. Our goal must be to succeed and grow, and aim to leave our business for the next generation in better shape than when we started.
I recently came across a very interesting analysis of how we could re-examine our thought process and decision making in this new world to ensure our survival and hopefully success.
The analogy was that we should look at how nature adapts and survives. In fact, one could use evolution as the example. We evolved based on needs and an ever changing environment.
There were four characteristics which I believe specifically apply to our industry to build a business that can withstand pretty much anything. I will preface this by saying, some will sound like wishful thinking, or who has the resources to do these things, however it’s worthwhile stepping back and considering how they apply to each of our businesses.
Businesses need a degree of redundancy, a word often used for computer or disk space, it applies to us in terms of if you’re running around chasing your tail, you literally have no time to step back and reflect on your business. Even if you did step back and identify areas that need improvement, do you have any excess capacity with your team to implement the necessary changes? It’s that little bit of redundancy that gives you the ability to continue to run your business and still make changes.
Diversity, this one is pretty self-explanatory for the Jewellery retailer today ,the silver and fashion jewelry looks interesting , however unless one has a reasonable product mix, such as a strong diamond business, one could find themselves turning over a lot of money with very little left over. But what about having diverse opinions in how we should grow the business.
”Are you open to this? more importantly, have you asked your team their views and opinions?”
Adaptive. How well do we adapt? This is probably the hardest for all of us, because change is difficult. Having to consider social media, websites, blog posts, and all the changes that happen within them, not to mention everything else we do. The older we get the less we like to change (guilty as charged), but to adapt means to change. The best example I can give you is from a poster that I spotted in Martin Place.
If we accept that this is true, ebay is claiming to be selling 81600 engagement rings a year in a market where the Australian Bureau of Statistics calculates that there is an estimated 126,000 marriages in Australia in 2016 ………………..is it possible that 65% of our engagement ring business is being done online?? Scary to say the least, and now more than ever you have to question how will we adapt?
How are you selling your diamond ring so that your valued proposition is more powerful than EBAY? Remember, the story you can tell, the value you can offer and yes price is important (I can tell you that there are circumstances that even the biggest names in the world offer a small discount) and the cornerstone is the trust you can build and deliver.
The fourth characteristic is Prudence. Apparently in our need to survive our instincts taught us to keep a little food on the side in case our hunting expedition didn’t go so well. We didn’t bolt in open spaces lest there be a saber tooth tiger waiting for us. You don’t need me to provide examples on how we apply this to our businesses, I will just say that in such a tumultuous business environment a bit of prudence could make all the difference.
We have been taught to set goals, analyze problems, set plans and look for efficiencies, this is mechanical thinking and it works most of the time. If we all agree that things are so unpredictable, than it’s the small start ups with that entrepreneurial spirit that are built around these four characteristics. These new companies are big on adapting, have redundancy in terms of people with multiple skill sets, and are so fearful of having so little money to work with, they execute businesses using the term “bootstrapping” this is when staff are given equity and paid minimal wages and work crazy hours.
We don’t have the luxury to look into a crystal ball, but we can try and rethink how we do what we do. Its this different approach that deserves us to stop and reflect, and the question we need to ask ourselves is “where will our business be in 5 years?”