How small businesses can survive and thrive in disruptive times

Colour film, typewriters and videocassette recorders – those are just three cutting-edge products obliterated by disruptive technologies. Yet the march of disruption goes on, and the genius of successful small businesses is recognizing disruption and moving quickly to develop products and services that speak to a new generation of consumers, says Bruce Croxon, partner at Round 13 Capital, co-host of BNN’s The Disruptors and three-year veteran of CBC’s Dragons’ Den.

Croxon was in Toronto on Oct. 3 at a TD-sponsored conference, speaking to an audience of small business owners on the impacts that disruption can have on a business.

Croxon knows disruption. He was one of the partners who co-founded online dating service Lavalife in 1987. “I don’t think I’ll see another change like the period I lived through in the mid-1990s when this thing called the Internet became commercialized,” he says. “My world shrunk overnight with the free passage of information and suddenly communicating with people on a global basis. The impact was profound and I was lucky enough to be in the right place at the right time.”

 TD provides customized programs for small businesses to help them excel at every stage, from start-up to succession planning.

Small business entrepreneurs today are being offered a golden opportunity with what Croxon calls the second-biggest business disruption he’s witnessed – the ability to produce, analyze and leverage data.“We’ve produced more data in the last year than we have cumulatively in the history of mankind,” he says. “The companies that are doing well and the ones I’m looking to back through Round 13 are the ones who have figured out which data is extremely useful.”

But it’s a two-edged sword. Companies can reach consumers through a multitude of data channels at a lower cost than ever. At the same time, consumers can leverage data to compare products and services offered by those same companies. That’s resulting in some hard disruptions to established businesses.

Disruption among business service providers is also driving down costs. Croxon recalls Lavalife’s massive machines and computer equipment filling a large room tended by dedicated staff. Small businesses can now avoid the high capital and operating costs of in-house servers, by outsourcing data storage and processing to the cloud.

“Today, I could knock off what we did with Lavalife in about three weeks,” he says. “That’s good news for people who want to invest in you. Small businesses and banks have to work more closely together to take advantage of these tremendous opportunities and it’s starting to happen in the tech space, which is very gratifying to see.”

For instance, TD provides customized programs for small businesses to help them excel at every stage, from start-up to succession planning. This approach allows for flexibility in every area of an entrepreneur’s business, keeping them prepared for the opportunities disruption can bring.

But while disruption can open up opportunities for savvy small business entrepreneurs, it doesn’t provide them with the fundamental ingredients common to successful businesses. That begins with entrepreneurs choosing a business focus that actually interests them. Croxon and the founders of Lavalife just happened to enjoy dating.

“You’re going to have to work at your business seven days a week,” says Croxon. “And if you don’t, your competitors will. If you happen to like the subject of your business, it might not seem so much like work.”

Entrepreneurs must also remind themselves of their own vision. That begins with hiring team players who also reflect that vision.

“Forget the five-year plan,” Croxon advises. “What tangible things do you need to achieve over the next 12 months to be where you want to be over the next 18 to 24 months and how do you incent your employees to achieve them?”

Finally, disruptive times result in disruptive business cycles.

“Small business is the biggest roller coaster,” Croxon says. “Don’t hang onto the highs too much, because that can change in a day. When things aren’t going well, hang in there and keep doing the right things, because that’s going to change too. Ride it out by getting the right people in the right seats with the right vision and the right performance management system. I think that’s the No. 1 key to surviving a disruptive business cycle.”