How long do you hang on to the belief that your once-successful product will make a comeback? It has to be one of the most difficult decisions in business. Crescent Ridge Dairy is an example of a company that hung on during a dip in the business cycle.
The dairy “processes and delivers its own brand of hormone-free milk in old-fashioned glass bottles” to customer homes. “Today, only about 1% of all milk sales are through home delivery”.
This company survived a long downturn in their business. Starting in the 1960s, consumers began shifting their milk purchases to mainstream grocery stores that sold milk with a longer shelf life. “Believing its core business was strong (Crescent Ridge) took advantage of the difficulties by purchasing the trucks, customer lists and assets of other small struggling dairies.”
Today, the “appetite for wholesome fare, coupled with raising gas prices” has increased demand for the company’s home delivery- a service that makes up 80% of their revenue.
The Lesson: If your core business- the product or service that generates most of your revenue- is declining, make every effort to determine if that core can survive the downturn. Is it a cyclical business that will come back, or a permanent change that cannot be reversed?
Your Homework: Consider how your business has performed over time. Have you survived downturns in the past? How did you overcome them? Are things any different today?
(Source: “Small Dairies Profit from a Resurgence of Home Deliveries”, Wall Street Journal, 5/25/07)
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment