In the world of business, the virtues of patience are often overlooked in favour of speed.
The moment a good concept and an appropriately significant amount of money combine (so the story goes), entrepreneurs must spring into action, or run the risk of missing out.
Yet, as American businessman and humourist, Arnold H. Glasow once said,
“You get the chicken by hatching the egg, not by smashing it.”
While ideas and funding are crucial to entrepreneurial success, long term financial planning and patience have a major part to play. Many of the most incredible business success stories have relied on great timing. While this can be the agility to jump on an opportunity immediately, it can also mean having the wisdom to sit back and wait for the perfect moment.
Take for example the cloud storage solution, Loudcloud, founded in 1999 – long before cloud computing became a household term. The idea – as we now know –was a solid one, but the timing meant that audiences didn’t need, or even really understand, the product. Had Loudcloud been released ten or fifteen years later, the story could have been very different.
On the flip side, private holiday rentals have been an established concept for more than 200 years. Yet, in 2008, two entrepreneurial San Franciscans recognised that trust in digital transactions was growing and that there was a chance to do things differently. Enter Airbnb, Inc. What’s particularly interesting about this example is that Airbnb didn’t hit its stride until 2012, when it went from taking one million to ten million bookings in just twelve months. While the idea was a good one in 2008, consumers weren’t ready to fully embrace it until four years later, when the sharing economy was more fully established.
Know when to strike
Successful timing relies partly on extremely careful financial planning – enabling a business to wait it out until the egg is ready to hatch. Keeping an accurate record of business performance can allow a business owner to forecast properly and pinpoint the ideal times for growth and expansion. The post-mortems of failed startups reveal that, financial issues are often a core reason for failure. Entrepreneurs on the site say the reasons their businesses collapse range from costs being higher than income, a failure to generate enough revenue and simply running out of cash, showing that poor financial planning can break a business. Forecasting can provide the full picture of the business so that it’s easy to get the timing right.
Financial planning is particularly critical for fast-growth startups as more growth usually requires more investment. Continued expansion in terms of staff and premises can be a drain on cash. Solid planning can keep a business owner abreast of this spending.
Know the bigger picture
Beyond the internal finances of the business, the timing in relation to wider socio-economic trends also has an impact on the likelihood of success, from social trends such as the sharing economy, on which Airbnb capitalised, to any regulations coming into force that may hamper the business. Research into any legislation that may have an effect will be particularly useful and could highlight times in which it would be beneficial (or detrimental!) to launch or expand the business.
New technologies and products can also create short windows of opportunity for businesses looking to launch or scale. The explosion in eCommerce towards the end of the 1990s created a raft of brands – think eBay and etsy. Having a strong knowledge of industry trends – especially those expected to happen in the near future – can ensure business owners are ready to answer when opportunity knocks.
Know the competition
Perfect timing also requires a thorough knowledge of the market and competing ideas. Ideas aren’t siloed; they exist within a matrix. The success of each depends upon the progress of the others. Knowing the competition inside out can provide a business owner with the critical insight they need to grow, expand and stay ahead of similar businesses in the market. You only have to look at Snapchat’s IPO plans – announced mere months after Instagram launched its Snapchat-esque ‘Stories’ feature – to see that market intelligence can inform commercial timing for the better. On top of this, obtaining statistics detailing the success rates of competitors can give also give an indication of the market’s appetite for a particular offering.
Ultimately, choosing the right time to expand rests on the shoulders of the business owner and their personal goals, as well as their business. But a thorough knowledge of competitors, the industry and of the finances of the business itself can provide a boost when the time comes. An exceptional idea deployed badly is still likely to fail, but an idea supported by good financial planning and timed perfectly has every chance of success.
There’s a perfect moment when social change, customer demand and technology come together – the key is to look after your business in the meanwhile and be ready when the time comes.
To find out how KPMG Small Business Accounting could help your business think bigger in 2017, request a callback for a quote today.
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