Lessons from the Trenches: Reinventing your business

It has been said that the only constant in life is change. However, it has been my experience that the only people who like change are wet babies — and me because I’m an oddball.

In my almost 50 years in the business world, I have seen many businesses fail because they didn’t adapt to change in their industry. One of the main reasons I have seen for business failure is the reluctance to employ and upgrade technology in the business.

One company I knew had a great business selling computer peripherals — printers, scanners and so forth — until the rise of the internet. Its customers quickly found they could buy the same products at 20% to 30% less than their longtime vendor from an online provider. This vendor didn’t provide any value-added services; he just sold peripherals. Once the internet disintermediated his business, he went bankrupt.

What could he have done to avoid this? One idea would be to bundle the sale of peripherals with installation, service contracts and consulting on the use of these products. If you are a “one trick pony,” you are done when someone shoots your pony.

When I bought the business I sold earlier this year, it was a “one trick pony.” This building-products distribution business sold only to light commercial contractors. By that I mean contractors who built strip shopping centers, schools and the like.

When I was with Owens Corning, the CEO at that time explained his push for diversification by saying that a stool isn’t stable with only one leg under it. To make my stool more stable we diversified into residential, industrial, road and bridge construction, and restoration and repair. We added tilt-wall braces and rebar fabrication to our offerings. Some of these new markets were countercyclical to other parts of the construction market and helped us survive during recessions.

One of my suppliers when I was in that business came out with a very high-quality product that took the market by storm. Unfortunately, its success attracted a lot of inferior copycat products that were attractive to people who bought only on price and didn’t care about quality. Rather than let these newcomers destroy his business, he created a cheaper product line and manufactured it in the same plant. He didn’t want to cannibalize sales of his flagship product, so he didn’t let anyone know that the lesser-priced product was made in the same plant. He even went so far as to get a post office box across the country for that product line and he put that address on the literature, invoices and website for his low-priced product. He then kept most of his high-margin sales and was able to sell to the low-end price buyer as well. His overall sales and profits skyrocketed.

Take a good look at your business and see if times are changing and you’re not changing with them. One of the most telling signs is several years in a row of declining sales and profits. Then you have to decide if you want to be a victim or if you want to embrace change and keep your business vibrant and growing.

Jim Sobeck is a Greenville-based serial entrepreneur. He most recently was CEO of New South Construction Supply, a distributor of building products he grew from four locations to 11 locations before selling it in February 2023. He is also the author of “The Real Business 101: Lessons From the Trenches,” available on Amazon. He can be reached at [email protected].

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