The Importance of Adapting Financial Models to Differing Industry Trends

By Jennifer Noble | Mar 09, 2018

Industries are always changing. No matter where one looks, no matter what the area of expertise, a curious individual is likely to quickly recognize the state of constant flux that makes up the character of the current market and industry trends. Unfortunately for those that aren't into the research and busywork involved in analyzing and keeping up to date with the latest advertisement monetization strategies, understanding industry trends is a vital piece of the puzzle when it comes to maintaining a lucrative business.


Analyzing Industry Trends is Vital to Success in Current Market Climates


Even a beginner or prospective business owner understands the importance of marketing when it comes to establishing a user base or client pool. However, not everyone may realize that failing to keep up with and maintain pace with the standards of a particular industry may play a significant factor in a failing business. In fact, using "intuition" to decide what might or might not sell or what might or might not attract clients, clicks, or other types of attention is one of the major mistakes many new or inexperienced business owners may make when chasing after that perfect revenue source.


Industries rise and fall on a yearly basis. What might be popular this year may have significantly less potential for economic gain next year, and what might have worked before might be an insufficient strategy for business in the future. There's no reason to worry, however, if a person does his or her homework and puts sufficient research and attention into targeting the correct demographics, putting money into best-predicted outcomes, and allowing some room for leeway and experimentation as they ride the wave of trends within their industry of choice.


Rate of Industry Change Affects Marketing Strategies


Chart Westcott, COO of Ikarian Capital states, “One of the most important factors to look at when it comes to a business and area of focus, other than the techniques and strategies proving most useful in someone's respective sector, is the rate at which an industry is growing and changing. An industry that has changed little comparatively may have an easier time keeping up than an industry which results in rapid change, but a rapidly changing industry may have more potential than an industry that does not experience this sort of growth.”


On the one hand, the expectations and current strategies associated with marketing and services in the technology sector is changing at warp speed. The demand for an easier lifestyle and more advanced products has created an area ripe for expansion. This growth creates an atmosphere in which a business owner, freelancer, or employee may need to acquire skills or research new marketing strategies quickly. On the other hand, the potential for growth in the industry opens the possibility for larger gains and business evolution. AI, robotics, and cybersecurity are just some of the industries that benefit from having a brighter predicted future.


Potential for Slow-Growth Industries


Quickly growing industries may not always provide the best investment for those that wish to start or advance a business. Some companies may benefit from slower-growing sectors of the market. An example of this phenomena may occur in specific cases, such as in drop-shipping firms or similar corporations. In this case, an often-oversaturated market combined with higher prices for goods and a less streamlined ordering process creates an atmosphere which benefits from a lower turnover of newer models or complicated strategies. Successful drop shippers often note "niche" markets, targeted to specific demographics, in areas of slower growth and expansion.


One of the biggest tricks in creating a successful financial venture in cases such as these is that sold items should be rare but popular enough to make a decent profit at a rate that is higher than standard. This illustration is an example of utilizing industry trends in an alternative way. Businesses that benefit from slow growth must factor in niche appeal and the possibility of market oversaturation; which, if successful, may provide superior opportunities for finding an edge before more competition arrives on the scene. Such businesses may not have to monitor model updates or inventory changes as closely, provided the products they sell are suited to their method of distribution. In cases of drop shipping where product models change often, sellers may find it harder to manage orders or correct potential inventory issues. Miscommunication with manufacturers is likely to be more common.


These are cases in which wealth management and financial advisors may come in handy, particularly if the business owner is beginning to enjoy higher returns. The ability to invest additional funds into potentially profitable areas may necessitate the use of tighter management than a mere individual.


A good financial advisor will understand the sector he or she is applying financial expertise towards, tailoring a client's package to fit the economic structure that is best suited to their practice. “With so much information readily available in today’s world, they can sort out what is essential and offer advice that is actionable, relevant, and makes you a profit. Even in those cases in which younger, tech-savvy business owners can navigate the developmental or technical aspects of their investments, many may not have the same fortitude when it comes to making wise monetary decisions.


Combine Predictions and Data for Better Outcomes


Industry trends are influenced by outside conditions: social, recreational, political, and a variety of other factors. Because of this, this particular aspect of business is similar in many ways to the stock market; which can be analyzed based on prior knowledge or influenced in unpredictable ways by events that haven't yet happened.


Anyone who has jumped into the challenges associated with running a business has likely explored a variety of different methods of acquiring the data needed to make healthy decisions for their particular industry. Google Trends, for example, provides data and charts relative to search engine results and interest in various sectors over different periods of time. Trends is just one of the many useful ways of analyzing product and service interest in the general public and can be especially useful for individuals that don't have the type of budget needed to invest in employed or contracted marketing specialists.


For larger businesses, a combination of useful tools and helpful agents might be just the thing needed to skyrocket business profits.


Even in an industry that is rapidly changing, taking advantage of a niche trend or monetizing a short-lived craze can add some serious padding to an investor's pocket, creating more room for an economic benefit in the future. Much like any other investment, analyzing market trends and appropriately using them to the advantage of a business requires extensive research, practice, and a commitment to the idea that an entity is attempting to sell to the public. It can be a stroke of luck (in cases of taking advantage of unexpected fads in the industry), or it can be a result of careful, extensive planning and individual or group research. In many cases, businesses combine both of these tactics to make the most of the economic atmosphere.


Every business is an investment, and while the cost may be higher at first (either in time, money, or both), it is often well worth it to put exceptional effort into market trends, and the potential profit that can result from utilizing them properly. With an excellent financial advisor, a business or individual could very well leap from average sales to something extraordinary. Cutting out time, documentation, and much of the risk involved in making personal decisions, businesses and individuals are likely to have much more time for the things in which they excel.



Comments (0)
If you wish to comment, please login.