From SCORE Richmond:

Bookstore owners, taxi drivers, telephone linemen, they are all part of a club whose numbers are rapidly diminishing thanks in part to Creative Destruction – a theory largely credited to Austrian political economist turned Harvard professor,  Joseph Schumpeter. the process by which something new brings about the demise of something before it. Bookstores have been replaced by e-readers, taxi drivers with ride-sharing apps, and telephones have been all but replaced by the use of cell phones. The list of examples is endless in today’s quickly evolving world.

 

Today’s entrepreneurs are operating in an environment that can change on a dime.

The successful business you may have run for years all of a sudden faces someone who can do it faster, cheaper, prettier, etc. No one is going to Sears anymore and why should they? It’s far easier to reach for the smartphone and open the Amazon app. For the entrepreneur to stay in business and grow he or she has to be constantly aware of the world and business environment around them. How many retailers watched Amazon growing and figured that it was a clever idea and not much of a threat. Borders didn’t.  Barnes & Noble didn’t, Sears definitely didn’t. In today’s world potential business threats pop up almost in the blink of an eye and it’s imperative to stay aware of the next thing coming down the pike. While social media may dominate most things, it doesn’t rule everything.  The local and national news is important – wherever and however you receive it, but you have to look for it and understand if it has any implications for your business, and sometimes you have to act on it.

 

One example is the current tariff fights.

A lot of things sold in retail stores come from China. Do tariffs affect any of the costs of what you’re buying? Toys are one example of a product where the costs are going to go up. There are dozens of other examples out there. Are any of them going to affect your costs, hence your prices, hence your profits?  You may be cruising along making money hand over fist (especially in this economy) but something may be appearing on the scene that could replace your product or service or do it better. The railroads owned the passenger business. Then Henry Ford threw a monkey wrench into the wheels, and the rest is history. Pay attention to the world around you.  You never know where a wrench might come from.