As I mentioned in my previous post, when my business partners and I first opened our store we purposely did not try to do everything our competitors did. As part of our beginning analysis we looked at each of our competitors and evaluated ourselves against them. There were some things at which we knew we could beat them all of them. There were some things at which we knew we could beat most of them. But there were some things at which we knew they could beat us. Where they could beat us significantly we decided it better not to try.’
One of those things was was renting new release videos. Even though the recent demise of Blockbuster (at least in our city) and Hollywood Video had decreased our competition, we knew that Redbox could beat us on price, Hastings could beat us on price and selection, and most critically, a local chain not two blocks away could also beat us on selection.
Redbox and Hastings we could compete by offering better programs and customer service, but the store two blocks away was just a bit more than we could handle. They had good service, a competitive rental program, and they could get more movies in more cheaply than we could. They would eat our lunch. So no go on the new releases. Videos would remain a sideline, focusing mainly on offering older titles cheaply.
And then the store two blocks away closed down. We were on good terms with them, so they put up a sign in their window referring their customers to us. Suddenly we were swarmed with displaced renters looking for new release videos. We didn’t have them. After a week or so of this we decided to try stocking new releases. About that time the swarm stopped. We’ve been buying new videos to rent for nearly two months now, and the indications are that it’s not going to pay for itself.
Hindsight is always twenty-twenty. We weren’t agile enough. We didn’t recognize the opportunity when it came. We probably should have raced right out and bought a few new titles the very day we saw the surge begin. We missed being able to serve a lot of customers who will probably never give us a second chance.
That’s not to say there haven’t been some other benefits to having tried carrying new releases. Some people have come in looking for them, and they’ve now become aware of our video game business, which is our primary focus. Some of our video game customers have also rented our movies.
And that’s not to say that we shouldn’t have been cautious. In the early, tender stages of a business, jumping on the wrong opportunity can be just as lethal as ignoring the right opportunities. New videos are not our core business, and it’s not entirely unwise to stay focused on what you do well.
But imagine what might have happened if we had been a little more creative in our planning? Is it really that inconceivable that a competitor might go out of business? Is it that big a stretch of the imagination that their customers might come looking to you to fill the void? (I can’t count how many customers showed up thinking we were the company that went out of business!)
Had we done a little strategic planning we might have come up with a contingency plan and accepted the risks of investing a certain amount of capital in an attempt to get a foothold in that market. We might have been more agile in jumping on the opportunity, and our video rentals might have become a viable profit center.
Everyone spends time (or at least should) making contingency plans for things that might go wrong in your business. Don’t forget to spend a little time thinking of things that might go right, what opportunities that might open up, and what to do about them. Though sometimes it may seem like it, not everything that happens in business goes against you. Sometimes things fall your way, and you need to be ready for it.