Let’s talk about a little supply and demand fundamental, which is really driving small business owners to make decisions that don’t seem to make a lot of sense… Excited yet?!
The concept is that you really shouldn’t be executing on aspects of your business that don’t make financial sense, or don’t have implicit demand.
To be honest, one of the most shocking things that I think’s happened in the last couple of years is the rise of these companies that have no fundamentals, no true financial success, becoming darlings in the media and in our culture- and being featured in everything as the best practice when they are actually the opposite of that. To be honest, they’re the worst case scenario!
So, I’m going to pick on my favorite love-to-hate company, and break down a little bit of what has happened when they went from media darling to downright done (from a successful business perspective). First off, I think it’s really important to walk you through the best practices of this, so that you can apply these principles to your business and hopefully make better decisions now and in the future.
Plunder-Ton, The Model for Success?!
Let’s talk about Peloton! Depending on who you speak to- they were the company to admire and emulate if you are in the wellness industry and looking to scale, fast! (Sarcasm… it’s free and so fun!)
Listen, as you may recall, I work with many successful wellness (and non-wellness industry) founders, and actually I think for so long, even if you weren’t in the wellness industry… there’s this level of respect for these big splashy companies that come in and disrupt industries. Heyyy Uber/Lyft, Robinhood and friends 🙄
I guess Peloton checked a lot of boxes, a lot of different business types and entities, even beyond the wellness industry…. I think what’s happened since they had their big boom is not shocking at all! It’s so clear… It is so based on KPIs and fundamentals!
So, I thought I’d just walk through it a little bit with you and have a conversation around what it takes to be truly successful today instead of just great on Wall Street. Fun stuff, yeah?!
It’s the Economy, Smarty
I think it’s best to start with the reason that most businesses are struggling right now, and that is supply and demand.
Friends, I want to keep it real here- there’s a real issue right now with the amount of available supply of services, products and offerings, and the demand for those very things. And while we could blame game this, and talk about all the reasons that are out of our control, and even probably somewhat valid. But the truth of the matter is- if you have a business (or even a side hustle) right now that is fulfilling a need… you don’t have a supply and demand issue 🥳
So, if you have to manufacture the need- if you have to generate demand… if you have to do ‘all the things’ in order to make sure you just stay afloat, then it’s time to really think about whether or not you have a business at all.
And before you call me the grim reaper… hear me out!
Are you making money (aka profit!) or is it just a hobby (even if you are making money)?!
I’m hoping you can hear my heart through these seemingly harsh words… does your business serve the community that it needs to serve, and the community that you desire it to serve?
Here’s the thing, when I think about the ‘Peloton conundrum,’ I think where things went wrong is that they had these big, exciting goals when they filed for an IPO.
Side note: I actually read the SCC filing because I’m a big geek 🤓 Especially when it comes to certain aspects of business, I just absolutely love going deeper!
What I found when doing so was a really clear admonition, which was that they absolutely knew they were not building that business on fundamentals of success.
So those that put Peloton up on the pedestal first was the company itself. Even though they were completely aware that profitable was a pipe dream at best 😱
Profit is Everything, For EVERYBODY
And yet, oftentimes if you’re running a small or medium sized business, profit is the goal. It’s not just like, “yeah we may never get there and that’s ok!” It’s more like, “we’re going to need to make some money this month, cuz the mama’s got to put some money in my pocket or purse!” Especially since you’re often the owner/investor/lead employee, and therefore likely the only person that really understands this need at the deepest level!
Of course, it’s a totally different mindset when you start getting into bed with Wall Street!
So I’ve known something wasn’t right because a business that has a product and a service just like Peloton- that is actually meeting a need in the world- should absolutely reach profitability! (I’m shouting again aren’t I!?)
But this is where things get kind of topsy turvy because they focused sooo much on total available market (aka TAM) and all these things that just kept spreading them thinner and thinner… the merchandise, then corporate wellness etc.
So I think what happens is a lot of times when you don’t have the fundamentals in play, you really don’t have a handle on what the business needs to be truly successful. They may know how to get venture capital. They may know how to raise money from external sources. But they’re not doing that based on revenue and expenses! (Ok, now I know I need to calm down!).
Forget Failing, Focus on Fundamentals
Of course they are failing, friend! Of course, they’ve now had to halt production. Of course, they’re laying off over 41% of their staff… fact check me on that!
It’s a no brainer. They are not a business. They are a zombie company that got a little ‘extra’ and decided to do ‘the most.’ Not recommended!
I really believe that it doesn’t have to be that way, but I think what I want to do is help you to focus on what truly makes you successful for these final moments. And that’s revenue 🤑 My fave thing to focus on! You know, all those boring parts of growing a business such as keeping expenses at a minimum, focusing on the profitability of your business, and to make sure you’re really meeting a need that’s out there, or knowing to invest in and budget for the demand you need to generate.
At the end of the day, I promise you- it actually is that simple, and it should be the principles of success for every business in the world.
But for now, let’s focus on your business fundamentals and your method of success so that you don’t have to go through that wild, unfortunate ride.
I really believe that you can actually get to that level of success that you’ve been dreaming of- I believe in YOU!
I’d love to hear more about where you’re stuck and maybe what fundamentals you think you’re missing so that you can get to that level of success.
Let’s talk soon!
You can solve just about any problem by asking the right questions, investing in what matters and taking action! -KK Fit Tip #1630