It’s a meeting that has gone down in the annals of history.
In 2000, Netflix’s CEO Reed Hastings flew to Dallas with a partnership proposal for the CEO of Blockbuster, John Antioco.
Their idea was simple: They wanted to help bring Blockbuster online.
At the time, Blockbuster was the undisputed giant of the video rental market, with thousands of locations across the world and millions of customers. Netflix was a small start-up which sent out DVDs to customers by post (but had big plans to go online……..).
“They just about laughed us out of their office,” recalled Netflix’s CFO, Barry McCarthy. “At least initially, they thought we were a very small niche business. Gradually over time, as we grew our market, [Antioco’s] thinking evolved but initially they ignored us and that was much to our advantage.”
We all know the result.
Netflix has grown into a business mammoth.
Blockbuster, meanwhile, filed for bankruptcy in 2010.
Of course, it’s not always easy to see into the future. Even the best businesses get it wrong sometimes.
Nevertheless, there is a lesson here for all of us.
Over the past month, I’ve been talking about the need for you to significantly invest in your business, in order to continue to evolve and grow. We’ve discussed how to reduce your risk; How to invest in the right things; And where to find the money.
And I understand how uncomfortable that feels.
You may feel very secure in your business. Maybe there’s a market you’re dominating, maybe you’re growing right now. If you have a nice business and are building up some cash, have a nice lifestyle and no debts, it can feel totally unnecessary and risky to invest tens or even hundreds of thousands of pounds to jump on an opportunity or move in a new direction.
The problem is, what if you don’t do it? What if you keep on chugging along, just as you are, and don’t make that investment? What many business owners don’t internalise is that staying still is just as risky.
When you stop investing in growth, you risk the market changing on you – just as it did for Blockbuster (and Nokia…. And Blackberry… And Kodak…..).
You risk being undercut by a new competitor, your customers suddenly moving elsewhere and your modes of operation becoming old-fashioned and not competitive enough.
I have seen this so many times. Business owners get complacent and develop a false sense of security because everything seems to be going well. They become risk-averse, won’t take big decisions….. …and then can’t understand why they are suddenly left behind.
My business mantra is: Adapt or die.
If you’re not moving forward, you’re moving backwards – and that is why you need to continually invest in yourself, just as you did in the early days of your business, when there was no choice.
What I’ve found, time and again, is that there is one thing which gives business owners the courage to make tough decisions about their future.
It’s knowing their numbers inside out.
When you understand your business’s whole financial picture, and can look far ahead financially…
Know that you are covered if the worst happens….
And have a solid financial plan and management in place….
Investment in new staff, new structures, new equipment and new opportunities suddenly feels less like a risk. It feels necessary.
As the outsourced finance department, our role is to give you those numbers, and help you use them to make the best possible financial decisions about your future.
We’re here so you can invest in your future confidently, and make all the necessary changes to retain your competitive advantage.
We want to make you Netflix – not Blockbuster.
If that’s something you’re interested in get in touch
