Businesses aren’t eternal—not even the world’s most renowned one, nor are those small-scale industries that operate in one of the corners of a city. They all started as an idea and would demise someday.
It’s completely NATURAL!
However there are businesses that last for decades or the ones that started 40-50 years ago but are still the leading brands and earning great amounts through it.
Did you know McDonald was founded in 1940? Since then it started to grow, became a franchise and is now known worldwide for its taste and quality. Overall, there are some companies that have survived more than a century while there are companies that failed and died within a few months of their start date.
So, how long does a business survive? And, what is the average lifespan of a company?
Earlier the average lifespan of business was more than 50 years, but at present it’s less than 18 years. McKinsey, a US-based management consulting firm, believes that 75% of companies listed on the S&P 500, will vanish by 2027.
It means that most of the companies that start would die out at 18 years of operation.
A business starts in the mind as an idea, a dream. No doubt, you need a good startup idea and further it takes a lot of effort to convert this idea into reality. But the next task after starting a business is to sustain that business or startup, that is, increase business lifespan and overcome the competition.
And, in case your business is somewhere near 18 years, you seriously need to adopt strategies to increase your business lifespan in order to avoid early demise of your startup.
A business doesn’t demand a one-sided approach. A minor loophole in your business strategy can be the reason for its major downfall.
The reason for the downfall of the well-established company, “Yahoo!” is shared below as an example.
YAHOO! - The Dead King
A present-day child might not believe it if we tell him that there can be any search engine more popular than Google.
But, we all know in the early 90s, Yahoo! was the king! It was then the most visited site in the world. However, the future of Yahoo! wasn’t so bright.
Was it just fate, or a strategic loophole—what led to the failure of this successful company?
Let’s see the reason behind the failure of Yahoo or common reasons behind the failure of a company:
1. Bad Leadership
One of the major reasons for Yahoo’s downfall was its bad leadership. Yahoo! hired the wrong CEOs multiple times be it Marissa Mayer or Terry Semel.
With social media apps coming, the users were getting more active on their mobile devices. But unfortunately, under Marissa’s leadership, Yahoo failed to adapt to these changing customer demands.
In 2008, when Google hired Eric Schmidt as its CEO, Terry Semel became the CEO of Yahoo. While Schmidt was a technophile and a visionary man, Terry was an oldie. He failed to understand the new Internet world and its new trends.
2. Wrong Decisions
Yahoo fell victim to some back-to-back wrong decisions.
In 1998, Yahoo denied Sergey Brin and Larry Page’s offer to buy Google at $1 million. Yahoo failed to recognize the worth of Google’s algorithm. Google, at that time, was just a small startup.
In 2006, when social networking sites were in trend, Yahoo tried to purchase Facebook at $1 billion but failed.
The list of Yahoo’s witless decisions doesn’t end here. Google rose to power and Yahoo’s popularity was dwindling. Yet again, the company made a mistake by rejecting Microsoft’s acquisition offers.
You can wonder where this company could be if only it would have accepted either of the offers.
3. Unclear Vision
Yahoo failed to acknowledge its the real purpose.
It wasn’t certain about what kind of company it was, whether it was a media company or tech company. Unlike Google or Facebook, it never had a clear mission statement.
So, now you know, without a proper strategy and vision, how even a big company like Yahoo, worth $203.27 million (as reported in 1998) can get crushed by the competition.
Tips To Expand Your Business Lifespan!
Starting a business or startup is not a piece of cake. There can be moments when you lose hope and the future of your company might appear bleak.
Do you think that the coming years might gulp in your business?
In these fluctuating times, it’s not very surprising for various business owners to think this way. If you have similar thoughts, do not worry!
You can still turn the table and alter your business’s fate.
Finally, let’s now discuss the topic you are here for! Here are some tips that many large companies are using to increase the longevity of business that you can use to expand your business lifespan:
1. Constant Business Upgradation
Don’t remain stuck in your comfort zone. If you’re unwilling to change with the changing market trends and technology, then it’s a red signal for your business’s growth.
“Upgradation” is the most important need for your company’s expansion.
With new start-ups coming every day, there is cut-throat competition in the market. And if you choose to battle it the old way, your company is only going to be kicked out.
You constantly need to upgrade your technology, skills & services based on customer demands. Study the changing market trends. Keep an eye on your rivals, see what they are doing differently from you. Try to learn from their progress and failures.
Upgrading your technology is also very important. Technology-up-gradation has helped companies boost productivity by 80% in the last 40 years.
Using the latest technologies not only boosts productivity. It also reduces the production cost by a huge margin. To remain ahead of your rivals, you need to upgrade your business in every aspect.
2. Constructive Collaboration
Strategic partnerships can prove to be a boon, you want your business to flourish in the long run.
Collaborative work is generally more innovative than work done alone. Big challenges become a cake-walk when handled together. These aren’t just big words of wisdom but a practical approach towards business growth.
If you want to walk fast, walk alone.
But if you want to walk far, walk together
– Ratan Tata
Based on a survey by Accenture, 76% of business leaders believe that current business models will diminish by 2025—ecosystems will be the main chain event.
When two visionaries work together for a common goal, the quality of their services is sure to improve. For example, when H&M collaborated with Versace and Margiela, the world got the most exclusive yet affordable range of clothing. Their sales skyrocketed. Talks of H&M and “cheap luxury” filled social media.
Well, it was only a small example. Ford’s collaboration with Agility Robots led to the invention of a cool delivery robot. This humanoid robot is smart enough to make doorstep deliveries all by itself.
Google teamed with Luxottica, a luxury eyewear brand to make the Google glasses.
This is how brand collaborations are revolutionizing the market and aiding each other’s growth.
Let’s have a deeper instinct on the benefits of strategic partnerships:
- With partnerships, we get access to extra resources and it’s easy to beat our competitors. The weaknesses of either partner are complemented by the other’s strengths.
- Due to enhanced customer experience, both parties grow their customer base. Around 57% of companies confirm that they use the partnership to get new customers.
- 44% of companies seek partnerships for new ideas, insights, and innovations. If both parties are passionate and loyal, innovation is sure to happen. Better strategies, performance, and products automatically occupy the table.
- Collaborations are a great way to expand your market and boost revenue
By 2025, the emerging ecosystems are going to account for more than 30% of global corporate revenues.
This indicates that the future is of alliances and ecosystems. And so to ensure an increased lifespan of your company, you must remember the popular saying, “United we stand, divided we fall.”
3. Rebranding Your Business
If you think your business is failing or you just wanna stand out, rebranding can help. This modern marketing strategy has been used by the best of companies like Google and Airbnb.
Old Spice, the popular perfume, is a great example of it. Back in the early 2000s, people perceived their products to be “old & outdated”. Whereas
“Axe” appeared to be a cooler brand, with fragrances that could lure women.
Old Spice, a perfume brand, was just declining with time. But that’s when the company began rebranding and altered its fate. They changed the entire picture of themselves in the eyes of the customers. They leveled up their perfume quality, packaging, and advertisements. Since then the company has successfully sustained itself making huge sales every year.
Now, don’t think this strategy works only for the biggies. Many small business owners claim that rebranding helped them save their business. You don’t believe it?
Check their stories at Creative Click Media.
4. Innovate and Expand
Business begins to shrink the day it stops innovating. Sticking to the monotonous range of products won’t help. A business must endeavor to expand its product quality and market. And, to bring the best on the table with all possible resources.
When you expand your range of services, eliminating you out of the market becomes a tough grind for your competitors.
Let’s take the example of Google, the most valuable company in the world today.
Google owns 92% of the Global Search Engine Share Market. The company doesn’t limit itself to just being a search engine. With its remarkable innovations, it has always expanded itself beyond imagination. Its products extend its services to day to day needs of common people to business with several effective tools needed for business growth. In addition, it provides some products that benefit developers as well.
Take a look at all the products of Google.
Over recent years, Google is putting its effort into developing Artificial Intelligence (AI) for everyone. This could be the ultimate innovation of mankind.
Google as a company, dies in parts but is also reborn in parts. If one Google service turns outdated, there’s a new one that becomes 10 times more popular.
5. Strong Leadership and Realistic Vision
Setting goals that don’t match your company’s capacities can cause a major setback.
Only a strong mind can build a strong empire.
I hope you read the above example of Yahoo!. If yes, you must have understood how “leadership” plays an important role in a company’s success.
Eric Schmidt took Google to another level. Whereas Yahoo struggled due to poor leadership.
As a leader, one needs to acknowledge the weaknesses and strengths of their company.And they must work accordingly rather than hitting random targets.
A company needs to recognize its goal and create the asset they need.
Step by step development is the key.
Setting goals that don’t match your company’s capacities can cause a major setback.
Your strategies work only when it’s set in the right direction and when you know how to manage them. The smartest of plans fail without proper management and this is what a leader has to do.
Learning how to build a strong team, constant evaluation, and to be able to identify new opportunities. These are some core qualities the leader of your company must develop.
6. Divide Your Business into Chunks
Don’t develop your business as one single structure with one mainstream for revenue. Instead, try to build multiple small business chunks, each independently brings revenue for growth and business longevity.
Final Words
Although no business could avoid their demise permanently. But one could always make their business survive longer than the average lifespan of 18 years thus increasing their business longevity through constant efforts and adopting healthy entrepreneurship ideas.
I have shared above some popular ways to increase the lifespan of your business.
Comment your opinion on what you think about increasing business lifespan.
Thanks for sharing an informative blog