The impact of the internet on the way we conduct business is as big, if not bigger, than the industrial revolution. Never has there been such an opportunity for innovative companies and aspiring entrepreneurs to develop new brands, products and services and make a thriving success.
The internet gives even small businesses the potential to trade globally and to source the best products and raw materials from around the world. It also opens up channels that have never existed before: you don’t even need a website anymore; you can sell directly from an app.
It’s not just the internet itself that is bringing this revolution; it’s the technology that can be used with it. The internet of things is radically altering the way people live and it’s the businesses that take an early lead on this which will benefit the most: those who build smart meters and intelligent fridges; or drone shipping companies and online ‘design your own clothes’ companies.
Why businesses need to adapt and keep adapting
The key to success is adapting. It’s a lesson we can learn from the industrial revolution: just as businesses that adapted to the division of labour, steam power and railways all prospered in the 19th century, companies that adapt to the internet will flourish today.
If you are a wholesaler or retailer, for example, it’s imperative that you sell online. Your physical store will lose business to competition from internet traders that offer customers the same products without the need to travel, get charged for parking or pay higher, in-store prices. The only way to compete is to adapt: sell online yourself and fight to get new business.
There are many businesses adapting to the internet and doing so successfully. How many local takeaways now sell their food through apps like Just Eat or Hungry House? Look at how Moonpig has challenged traditional card shops like Clintons? The rise of the internet, however, has gone much further that just benefitting online retailers. Look at the increasing number of delivery companies to choose from these days. Because of the increase in people buying and selling on places like eBay, many of these companies have offered services that the bigger companies couldn’t – they collect as well as drop off and do it cheaper, servicing the internet sellers. Wholesalers, too, have got in on the act. They have seen the exponential rise in the number of small, niche-focused traders who cannot afford to buy in bulk and realised that it is a lucrative market for them – to adapt to this market, they now offer drop shipping to these retailers. It’s a win – win situation.
For most businesses, there is potential to use the internet to increase sales or to develop products and services which internet retailers will need – you just need to have the foresight to find it and the courage to adapt yourself.
Out with the old
As the internet continues to advance, it puts some businesses and even entire industries under threat. If you look at the impact of digital music over the last 10 years, not only did it signal an end to record stores, but it also affected all those other industries reliant upon it: music artists, record companies, cd manufacturers, printers, window display companies, transport companies, the list goes on.
The same goes for DVDs. Whilst Blockbuster disappeared from the face of the earth, its main British competitor, Love Film, was savvy enough to move into digital streaming. It became so successful that Amazon bought it and changed it into Amazon Video. One adapted, one folded.
In the future, more and more industries are going to find their existence under threat. Phone-pay will end the need for plastic credit cards, online booking will kill off high street travel agents, online 3d printing services will impact on a whole swathe of industries. In fact, we only have to look back at the last ten years and we can see how many things have been affected by the internet: renting videos, buying paper books, classified newspaper adverts, traditional maps, using a phone-box, looking for a business in the Yellow Pages, getting bills through the post and paying them at the Post Office.
In ten years’ time, there will be even more things we no longer need to do because of the internet and those businesses which provide those services now will either need to adapt or they will cease to operate.
What happens if things go wrong?
The bottom line is that things change. You have to adapt and keep adapting or your market will disappear. The consequences of this are disastrous: turnover reduces, cash flow problems begin and sooner or later things become desperate. It’s at this point that you need to take a close look at your business. A good business person knows when to call it a day before the ship capsizes.
If there is no way of turning your business around, there is no point in bailing it out with your own hard earned money or even worse, by taking on loans to keep it afloat. That money could be better spent on your next venture. There’s no shame to be had in winding up your business. There are plenty of exceptionally successful business people who have failed in one enterprise and succeeded in their next. They learn their lessons and keep on trying. Bill Gates is probably very happy that his first company Traf-O-Data failed because, if it hadn’t, he’d never have become the world’s richest man. ‘Even though Traf-O-Data wasn’t a roaring success,’ Microsoft Co-Founder, Paul Allen, tells us, “it was seminal in preparing us to make Microsoft’s first product a couple of years later.’
The lesson is this: when the signals are clearly telling you that your business is not going to survive, don’t throw good money after bad. Close it down before you are saddled with too much debt and start afresh. It takes courage, especially if you have worked hard to build the business up, but it is the right decision.
Help for struggling businesses
If you do find that your business is failing, then you need to take immediate action. Doing this will minimise any debt you owe and have less impact on you, your creditors, employees and customers. Luckily, there are specialists available to help you with professional business debt advice.
Company debt advisors will help protect you from creditors. They will give you a clear picture of where your business stands and guide you through all the available options, including which debts you need to pay off and how. If you can do this early enough, you might be able to keep your company going and adapt your business model to one that may succeed in the long run. However, this may mean having to streamline your business, refocus on new income channels and even make redundancies and other cost savings.
If your business cannot pay its creditors then they may seek company liquidation or you may request voluntary liquidation if you know your business is in a position from where it cannot recover. Company liquidation would enable you to sell off any company assets in order to pay off outstanding debts. Again, you should seek a good business debt advisor to help you through the process.
Liquidation, of course, means winding up a company. To do this correctly, there are several steps which need to be completed, some which take priority over others, such as paying taxes. This can be a very stressful time for a business owner and it’s important that it is done the right way. Getting sound professional advice and help to achieve this ensures it follows all necessary procedures, is as stress-free as possible and that there is minimum impact on you.
If you need financial assistance with your business or have any questions, you can get free advice by contacting CompanyDebt.com
To give you a little more insight into how the internet has affected businesses, see the infographic below.