5 New Years Resolutions for Your Business in 2012, Part 4

So far we’ve had three New Years’ Resolutions for your business, and each of them has been tailored very specifically towards the way you think about and approach your business. Now I want you to take the time to analyze not just your business, but also your business environment.

As a turnaround professional, I know how fast things can change in business. A new competitor can enter the marketplace, seizing a large percentage of your market share in a matter of weeks or months. By undercutting prices, getting better arrangements with vendors, capturing a few large clients/customers or offering something you’re not, competitors can be ferocious.

Rather than live in fear, however, there are some steps you can take to minimize the impact of competitors on your business, at least as a surprise. First, if your business relies too heavily on a “Big Gorilla,” (that is, a single customer or client), make sure that you either diversify, determine what you can do absolutely best for this customer/client and do it, or ensure that there are legal reasons this customer/client is bound to you.

In addition, don’t compromise on routine competitive research to regularly evaluate the marketplace and business landscape. Consider having a full time employee whose job it is to research the products you offer, who else offers them, at what prices and with what conditions, what vendors they use, where they’re located, what their growth looks like and more. If you use the Internet to do a lot of business, consider the tool Spy Fu.

You must know your competition, and you must know them well. Consistently investigate your competition and what your competitors are doing. You never know when a flailing business will be ready to be bought out by a ready and poised you. But you’ll never know if you aren’t researching the competition.

As you plan for the New Year, consider what a great time it is to take a look at your competition in order to incorporate any new information into your planning and self-evaluations.

Monitoring your competition isn’t the only thing you should do to watch your business environment. If you’re in an industry subject to regulation, keep your eyes out for any new legislation as the clock tics towards 2012.

What are you doing to stay apprised of your business environment?

What Texas Hold ‘Em Can Teach You about Business

All business proceeds on beliefs, or judgement of probabilities, and not on certainties.

  • Charles W. Eliot

If that isn’t the truth, I don’t know what is. My business is driven by businesses that believe that business is certain.

Business is Not Certain

I won’t go so far as to say that business is a gamble, because business is no roulette wheel. Roulette is entirely a game of probability. And when you add 0 and 00 onto the wheel it becomes probability that’s stacked against you every time.

Business is more like poker. You know what’s in your hand (King-4 suited, let’s say), and that hand is playable.

As the game proceeds and cards come out, you have a better idea of the conditions, like your assets, customer base, and so forth.

However, there are also things you can’t affect – though you can make educated predictions – like what’s in your opponent’s hand. In business that would translate to prevailing market conditions, natural disasters that disrupt supply lines (can anyone say Japanese Tsunami?), and so on.

Beliefs, Judgments & Probabilities

People who play poker purely based on the mathematics believe that, if they look at and comprehend everything on the table and what their opponents could be holding, poker is a game of probability.

However those who play Hold ‘Em know that they also have to follow their guts and use their instincts, taking subtle clues from the situation around them. How long did their opponent take to check, bet or raise? What was that raise and how does it compare to the blinds and the pot? Did you perceive a tell and are you sure that is his tell? What’s the pot at? Is he bluffing? Should I bluff?

The answers to all of these questions are, to some degree, unknowns, and our opponents are thinking comparable things (remember, in the analogy, poker opponents aren’t our business competitors – they’re larger issues we don’t know a lot about).

It is due to these questions, our gut feelings about their combination of possibilities and effects, and sheer probability, that we make decisions and act, both in poker and in business.

The Illusion of Certainty

Nothing is certain because we don’t know beyond a shadow of a doubt what’s in another person’s hand.

When businesses make spreadsheets and predictions, they fail to understand that they haven’t accounted for everything. There are unknowns and spreadsheets are based on assumptions. Spreadsheets are almost always wrong. And try as we might to act based on spreadsheets and these assumptions, an opponent’s better hand is still going to beat us.

But if you’re a good player, and you consider as much as you can, and act in accord with what you’ve considered – and you face your harsh reality (i.e. what’s in your pocket and what comes out on the table as it comes) – then you can act intelligently.

If you lose a hand – and you will – that’s okay. As long as there are still chips in your stack – which we’ll call your contingency plans, something every business should have – you’ve made it to fight another day, and play another hand.

Summary

Remember, the business lesson to learn from Texas Hold ‘Em is that nothing is certain in business. As Charles Eliot says, everything is based on belief, judgment and probability. It’s understanding that fact, and acting based on it and those beliefs, judgments and probabilities, that will make you a good business leader.

And don’t forget, you only get knocked out of Texas Hold ‘Em when you go all in.

Do you play poker? How do you apply it’s lessons to business? What other games in life help you learn about business?