On a daily basis I work with a CEO of a company whose business plan I cannot quite grasp. The business is not doing well, and usually I like to see the business plan and try to find if in that essential piece of foundation of a company is already something that could be the cause of it; a bad interpretation of the product/service, maybe the market, resources? And yes, actually, with this business plan it is all of the above. When you read the business plan there are misinterpretations on so many levels that it is obvious that the company has issues. But the major problem is it’s product. It is producing leads for sales of car dealers. But it is new at that, so the income has to start at $0.
And the car lead market is quite a saturated market. Cars.com and caranddriver.com and autotrack.com and sort-like sites have set up a name already in this market. Asking people to give up their contact information to sell this to the car brands or dealers. Not only that is a problem, but also that more and more, lead information is often not reliable information. I have to admit, if I have to fill out a telephone number somewhere online, I always make a typo. My address is always one that doesn’t exist. My lead information is absolutely worthless. And not only mine. So if you do not have experience in this field, knowing what leads are good or bad, is something that might be a huge problem, if you get any solid number of leads that is.
Then, of course, the car market is not the hot place to be right now. People still want to buy cars, but cannot afford it. Or even when they can afford it, they might not be able to get a loan or lease with the current drop in the credit scores and bank problems. So that also makes it not a catch-and-dunk if the lead information is actually correct, which pushes the numbers of leads even further down.
So, there are many ‘I told you so’s’ in this business plan to point out why the company is actually failing. But is that really true? Because somehow there might be some strength in this business that is not that obvious. We all know that the car market is being hit hard, but just like the IT market in the late nineties such a crisis filters out the ‘bad’ and ‘too many’s’ leaving a smaller, but healthier and stronger market behind. Look at it as an obese person losing a lot of weight to live a healthier lifestyle again. And in such a crisis, the producing companies usually take another look at all their production and service processes, and modify them to fit a new market. It is called evolution.
And these car brands (OEM’s) will at one moment rise against these tons of bad leads that they receive, that they pay for but see nothing for in return, except losses for employing people to follow up on them. There will be a market for solid leads, absolutely. And this is in the business plan of this company; solid, checked and trustworthy leads.
But the OEM’s are not there yet, the market is not there yet. As long as people do not trust car dealers and the internet enough to provide all the information requested in pure trust, the market will not be ready. Also, OEM’s and dealers should learn to ask only relevant information. Doing so will gain more trust from the people, which will result again in the will to give out this information if it is necessary to provide it.
So, a dying market is actually never a dying market, but a market that is changing. And where change is, are new opportunities.
The only problem is that these changes usually go very slow, and for this company, they might actually have been far ahead, maybe a little bit too far. Because it might very well be that it the losses right now might cause this company to go south well before the perfect timing was there.