The Three A’s of Business
Overview
In business schools, the importance of the three P’s of marketing is emphasized. Equally important are the three A’s of business. Issues like climate change as well as international, national, and local trends can impact your business, and understanding the three A’s that businesses need to use is important to counter any effects of those changes and trends.
It is important to remember that business is a complex series of relationships that owners must manage in order to maintain profitability, create shareholder value, and ensure the sustainability of the business. The most obvious relationships are those with customers, employees, and vendors, as without those your business would not exist. These relationships, as well as all the others in your business, are not bilateral, they are all interrelated. For example, your customers want to pay the lowest price possible for your products or services. However, if you strive to only meet that requirement to satisfy the customer relationship, you will have a poor relationship with employees who would be underpaid, and with vendors who would have a low margin on their sales to you. While in the short-term your customers may be satisfied, in the longer-term employee morale and turnover, customer service, and vendor delivery and support would suffer. As a business owner, you have to manage all of these relationships in concert in order to achieve a balance that satisfies everybody.
Other straightforward relationships exist with your landlord, neighboring businesses, your support of and service to your community (they are your potential customers), and your competitors (in terms of the ethics in competition between you and them). Less obvious relationships exist between you and the local, state, and federal government entities you operate under. Legislative changes they can make to traffic patterns, parking rules, street closures for special events, sales tax rates, new taxes, minimum wage laws, additional reporting requirements, and other rules can upset some of the other relationships in your business. As a result, you must re-balance multiple relationships to keep your business viable. While business owners have to react to changes like this on an ongoing basis, it would be better if you could be proactive.
This is where the three A’s are important:
- Awareness of the issues that may impact your business in the future,
- Anticipating what the proposed issue resolutions might be, and planning for
- Adapting to them in the most efficacious and cost-effective way.
You should be aware of political, economic, social, and community trends as these will all potentially affect your business. It is more important to be aware of trends and anticipate their future than to try to classify them into a single category as they can be interrelated as well. Oil prices, as an example, are driving international, national, and economic trends, and could be impacting social and community ones related to alternative energy and mass transit. Politically, election outcomes will affect taxation, health care costs, and other issues that will impact your business. Economically, the Federal Reserve’s position on interest rates will affect borrowing costs and should be considered in your plans for both long-term and short-term financing.
Socially, if you think you know how to market to the millennials, you are one generation behind. The first members of Generation Z, which has been coined the “post-millennials” will be approaching age 25. Wunderman Thompson, an international Brand Growth Consultancy with over 20,000 associates in 90 countries notes that Gen Z’s buying power in the U.S. is $100 billion versus $65 billion for Millennials. Business Insider notes that Generation Z makes purchasing decisions differently than Millennials and values brands over generic products, one-click online purchasing, app-connected products and services, and uses mobile devices for virtually all of their shopping. Stilt.com reports that 17.4% of Generation Z shoppers between ages 18 and 24 prefer to use cryptocurrency for purchases.
Recently, the Russian invasion of Ukraine has affected multiple supply chains worldwide and the Covid Lockdown in China is just beginning to have worldwide economic implications. Unprecedented weather events that may be related to climate change are affecting the insurance market, which will impact real estate values and construction costs. Talk of inflation and possible recession abounds. All of these issues are among those that will affect the relationships your business must manage.
Railroad crossing signs used to say, “Look out for the Trains.” For business that could be paraphrased to “Look out for the Trends.” Be AWARE, ANTICIPATE, and ADAPT! As Charles Drawing noted, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change!”
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