Isaac Newton’s first law of motion is fairly simple: An object at rest will stay at rest until acted upon by an outside force. Similarly, an object in motion will stay in motion until an outside force stops it or changes its direction.
This is a foundational law for understanding how matter moves through space, but I find that business operates along similar rules. And just as with Newton’s laws of motion, people tend to overlook the impact of what this means.
Business momentum tends to be a more significant factor in gauging a business’ performance than many people think. Some of what is happening to you may be of your own making, but it’s important to remember that you're surrounded by outside forces that could change your trajectory.
In Newton’s example, “outside forces” are things like gravity, friction, wind resistance, etc. But in business, those forces look like a variety of things — some you can control and some that are entirely beyond your power to change.
I’m referring to things like decreasing sales in a product line, consumers choosing Bundle A over Bundle B, drop-offs in returning customers, etc. In my world, these are trends, and Doug’s first law of business is that the trend is the trend until an outside force changes it.
Like gravity or friction, you often don’t have much direct control over many forces. But you should be able to identify them because whether you can or not, they will impact your business. And in some cases, a negative force might come from within your organization without you realizing it.
Your business cycle has trends that may be hidden. Finding these often involves a broad look at numbers through time and across product lines. I like to find unexpected patterns. Recently in working with a subscription-based company, we identified a very unexpected hot spot. Only by laying activations out across five years did we identify a strong seasonal bump in one subscription type, hidden by a weakness in another. It was big and opened the door to create sales pressure where we had never thought logical.
This is an example of taking note of the areas that I have the power to influence within the “trend” of outside forces — things like my management style, how we price, the quality of our products, sales pressure, etc.
Once you clearly understand what's in your control, you have a path forward to impacting the trends — if that’s something you want. If, on the other hand, the trend is favorable, that may not be ideal. Just like you can turn around a negative trend, you can also unintentionally mess with a trend that's working in your favor.
I saw this firsthand when working with a client who wanted to add an extra incentive to a certain product line. Their reasoning made sense — if I give customers another reason to buy this product, our sales will increase.
Except that wasn’t really how things turned out in this case. The trend was that sales had already been perfectly acceptable for this product line. But once an outside force acted upon the trend, it changed directions, and sales for that product suddenly decreased.
The client and I each started researching and reaching out to customers. We reported the same findings — by increasing the incentive to buy, we cheapened the product in the customers’ perception.
If we hadn’t noted the lower sales yield on that product line, we would have been entirely ignorant of this new trend and thus unable to remedy the situation. As it was, the client had to back off on that product line until later, when the market would be more receptive at the higher price point.
I recommend starting simple for your research into the trends impacting your business. I like to make a sales graph, print it out, then lay a ruler across it. It’s a little rustic, but it’s also an excellent way to identify sales patterns, allowing me to work from there to figure out what trend is causing the results I’m seeing.
As you look back at your sales, try a couple of different time periods — several months as well as several years. When you can see clear up- or downswings, try to identify the trend that was working with or against you at that point. For example, were there a lot of layoffs that year? Was your community going through a rough financial spot when sales dropped off?
These can help you identify the trends that have impacted your business in the past, which is an essential step in figuring out how the next trend will hit your bottom line.
Once you understand the trends working in your business, you can start tackling the issue of changing your behaviors to adjust them. Or, if you’re lucky, you can identify what’s working in your favor and ensure that nothing messes with it.
Doug Phares is the former CEO of the Sandusky News Group. He currently serves as managing director of Silverwind Enterprises, which owns and provides management services to small businesses. He can be reached at firstname.lastname@example.org.
No comments on this item Please log in to comment by clicking here