The dynamic nature of business

A dynamic business is one that can respond and adapt to changes in its market. Rather than carrying on with products that are losing demand, it changes what it offers, how it sells it or who it sells to.

Markets never stay still. Customer needs shift, technology moves on and competitors bring out new products. A business that reacts to these changes is more likely to keep its customers, protect its sales, survive and grow. One that keeps doing the same thing may find its products become obsolete, as customers switch to a rival that has moved with the times.

Three ways to respond

• Adapt an existing product so it fits what customers now want — for example, adding a feature a rival already offers or making a version aimed at a different group of buyers.
• Replace it with a different product or service once demand for the old one has gone.
• Develop something new that uses the business's skills and existing customers to open up fresh sales.

Worked example

Harlow Photo Studio used to earn most of its money from family portraits. When phone cameras improved, fewer families booked a sitting. Instead of advertising the same packages harder, the owner responded: she replaced them with passport and ID photos, took on product photography for small online sellers, and started drone photography for estate agents selling houses. She kept the shop, the staff and many of the same customers, but the work the business did changed, and sales recovered.

A business does not have to be new or small to be dynamic. A large, long-established company can be just as adaptable if it listens to customers and watches its competitors. Being dynamic is about how quickly a business responds to change, not about its age or size.

A change in technology means new tools, machines, software or materials become available, or existing ones become cheaper and more capable. When that happens, it can create an opportunity for a new business idea, because a product or service that was impossible or too expensive before can now be made, sold or delivered.

New products and services

Technology opens up ideas that could not have existed earlier. A two-person physiotherapy practice, for example, can now offer video appointments where the patient wears a cheap movement sensor at home. The physiotherapist watches the shoulder exercises live, and the sensor records how far the arm moves, so progress is measured without a trip to the clinic. The service needs a video platform, low-cost sensors and secure storage of the data. None of these were within reach of a small business a generation ago, so the idea is genuinely new rather than a copy of a local clinic.

New ways of meeting customer needs

The customer need often stays the same; technology changes how a business meets it. People who work long hours still want their dog walked. A dog-walking firm can now fit GPS-tracked collars and use an app that sends the owner a map of the route, a photo and the time of the walk. The need is unchanged, but the business meets it more conveniently and wins the trust of owners who would otherwise worry, so it can charge more than a walker who simply leaves a note.

Technology creates the opening, but it does not make the idea succeed on its own: as the owner of a new business you would still need to check that enough customers want the service and will pay a price that covers the new equipment. The same change can also work against a business, because new technology can make an existing product obsolete.

Customer wants are not fixed. The tastes, needs and preferences of customers change over time, so demand for products and services shifts with them. When demand moves, customers whose wants are no longer being met create an opening for a new business idea.

What drives the change

Changes in what consumers want rarely happen on their own. They usually follow wider changes in society — in habits, fashion, health, working patterns or environmental concerns — which then affect what people choose to buy.

From changed wants to a business idea

Existing businesses often carry on selling what worked in the past, so a change in wants can leave some customers unsatisfied. Spotting that is the start of a new business idea.

For example, in your town more households now keep a dog, and both adults work full time away from home. Those owners want someone to walk the dog in the middle of the day and somewhere safe for it to stay overnight. A dog-walking and day-care service meets a want those customers did not have a few years ago, when far fewer households kept a dog and someone was always at home.

Wants do not change at the same speed for everyone, and different customers want different things, so a change only becomes an opportunity if enough people actually switch what they buy.

A product or service is obsolete when it is no longer wanted, used or needed, so demand for it has fallen. Being obsolete is not the same as being old or broken: something can still work perfectly well, yet almost nobody wants to buy it any more.

Why demand disappears

• New technology: a new device or system does the same job more quickly, cheaply or conveniently, so customers switch. Printed road atlases, encyclopaedias and phone books barely sell now that a phone can give directions and answers in seconds.
• Changed consumer wants: habits, tastes and priorities move on, and a product that no longer matches what customers care about stops selling.

Once customers have drifted away it is hard to win them back, because they have already got used to the alternative. Falling demand is the signal that a product's time is up.

The opportunity inside obsolescence

Falling demand is not just bad news. The need the old product met has not gone away, and the products that replaced it may not suit every customer. That is the opening for a new business idea: offer a replacement for the old product, or a better alternative that solves the same problem in a new way.

For example, a small firm that printed flick-through paper catalogues for holiday companies saw orders collapse as customers browsed destinations on their phones. Instead of trying to sell more printed catalogues, the owner set up a service that builds short photo-and-video catalogues which travel agents send to customers by message. The printed catalogue was obsolete, but the need to show customers what a trip looks like was not, and the new service captured it.

An original idea is a product, service or idea that has not existed before. Nobody else is selling it, so at first the business has the market to itself — exciting, but also risky because demand is unproven.

Why an original idea can pay off

Because the offer is new, it can give the business a unique selling point (USP) — a feature no rival can match. A USP creates competitive advantage: customers who want something different are drawn to the business, and because there is nothing quite like it on the market, it may be able to charge a premium price and earn higher profit per sale.

Why it can go wrong

Being first is rarely cheap or quick. A business may need to fund research, build prototypes and test the product before launch, and this can take months or years with no income coming in. It is also risky: there is no sales history to judge demand, so the business cannot be sure customers actually want the product or will pay what it costs to make.

Original compared with adapted ideas

Priya designs a bike lock that sends a message to your phone if the bike is moved. Testing the gadget and its app costs her a lot of money and takes over a year, and she cannot be certain cyclists will pay a high price instead of buying a plain lock. If it works, though, no rival can offer the same thing at first.

Both routes aim to meet customer needs and make sales; the real difference is how new the offer is, and how much money, time and uncertainty the business takes on to get there.

One way new business ideas come about is by adapting an existing idea: taking a product, service or business idea that already exists and improving, modifying or repurposing it. The business starts with something already known to work, then changes it rather than inventing from scratch.

Why adapt an idea?

Adapting can be quicker, cheaper and less risky than starting with an original idea. The business can reuse existing methods, materials, equipment, staff skills or customer knowledge. This reduces the time needed to develop the idea and the money spent testing something completely unknown.

Businesses adapt existing products or services to better meet customer needs, solve a problem, target a different market, or use a new method of production or distribution. A new idea can also come from spotting a problem with an existing product and finding a way to improve it.

For example, a two-person gardening business mows lawns and trims hedges for local households, but the work dries up every winter. Instead of closing down, the owners adapt the same business: they add a winter gritting service for the driveways and paths they already look after, and also for nearby shops and offices. They use the same van and their existing local reputation, so the new service is quick and cheap to try out. Gritting solves a real customer problem (slippery paths in icy weather), sells to a different market (shops and offices rather than households), and is delivered in a new way (early-morning visits before staff arrive). The owners have not invented a brand-new business; they have repurposed the skills and customer relationships they already had.

Drawbacks

An adapted idea is usually less innovative than an original idea and may be easier for competitors to copy. If the winter gritting round proves popular, a rival gardener could buy a spreader and offer exactly the same thing to the same customers. The business may have less of a unique selling point, so it must compete on quality, price or service.

A gap in the market is a customer need or want that is not currently being met. Spotting a gap is one way that changes in what consumers want can lead to a new business idea, because the demand is there but existing products or services do not satisfy it.

Businesses often look for gaps by noticing complaints, tasks customers have to work around, or groups of customers whose needs are overlooked. A gap can be about a feature, a lower price, a more convenient way to buy, or a product designed for a particular group. The important point is that customers want something, and the current choice does not fully give it to them.

Turning a gap into a business idea

Once a gap is identified, a business can design a product or service to fill it. This gives the business a clear reason to exist: it is solving a problem for customers rather than copying what is already on sale. For example, a student notices that classmates want a slim phone case that also holds a bus pass and a house key. Shops sell plain slim cases with no storage, or bulky wallet cases that are too thick. The gap is a slim case with a small secure pocket. The student designs one, and the gap has turned into a possible business idea.

A gap can exist even when a market is busy. It is the unmet part of customer demand, not simply the absence of competitors.