How businesses can avoid the boiling frog syndrome

James looked down and said, “I feel like taking a break from business.”

“To do what?” I asked him. After a pensive pause, he said: “Nothing.”

I simply don’t have the motivation, energy and enthusiasm I had some time ago. It is no longer exciting to do business, he said with a resignation tone.

I got to understand his frustrations when he narrated to me how everything in his business is falling apart. He is working very hard but getting deeper and deeper into debts, his employees are agitating for pay rise and all his projects stalled long ago.

As I probed him to know when the rain began to beat him, what came to my mind is the “boiling frog syndrome".

The boiling frog syndrome is a phenomenon where if a frog is suddenly put in a pot of boiling water it will jump out to safety quickly.

However, if it is put in normal water that is heated slowly it will not perceive any danger in the rising temperature. It will try to adjust itself to the discomfort of rising temperature until when the water boils and kill it.

Many people and businesses today are apparently in this precarious situation and need to act fast or perish.

Some of us may have noticed that in the past several months the prices of most commodities have gone up. The price of food, cooking oil, fuel, cement, metal, just to mention a few are going up nearly every day and hurting business.

Unfortunately, most small businesses have not, or apparently are not able to adjust upward the price of their products. As a result, their profit margins are reduced or completely wiped out.

If one is not keen to realise what is happening like James, the result is getting deeper into debts or struggling to work extra hard to remain in the same position.

What is happening globally such as the Russia war with Ukraine, Covid-19 disruptions and terrorism will definitely make the situation worse before it probably gets better.

To save yourself and your business it is important you know your true position and the direction you are headed. You must ensure your business is profitable and you are moving forward and not backward.

The traditional way of increasing profit is to increase your selling price or reduce costs or both.

Whenever the cost of raw materials or stock goes up, the best practice is to pass it to the customer to save your margins. If this is not possible the other alternative is to find other ways of reducing some of your costs such as personnel and operations generally.

This happens in normal time when the costs go up suddenly and radically such that everyone can understand that there is inflation. However, when the costs go up slowly over a period of time, only the wise will understand that the “temperatures” are slowly but dangerously rising.

Customers generally are not attracted by price only. The main driver of customers to your premises is the value they get. Try to add more value to justify a price that is mutually beneficial.

Mr Kiunga, Author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’