Focusing on these 10 basic business strategies can differentiate your company from its competitors.
I once attended a five-day seminar that attracted owners, presidents, CEOs and other senior executives in which the instructor outlined an interesting series of key U.S. economic events over the last 100-plus years. Over this time, he said, there was an economic downturn every five-to-seven years and that these downturns were due to the mismanagement of some common business and economic realities. He said these downturns flushed out businesses that didn't know how to sell their goods or services at a profit.
To teach attendees how to do this, the seminar outlined the basic framework that must be followed if a company wants to always make a profit. While consulting with companies in the electrical industry, I have met many executives who haven't developed a strategic plan for long-term profits. Here are 10 ideas you can use to develop such a plan for your company.
- Keep your company fresh by consistently investing in new products or services
Some companies aren't passionate about new products and instead rely primarily on existing products. But profits from existing products can erode over time from competitive forces, inflation and the general cost of doing business, such as rising salaries and input costs. A company not thinking of introducing new products at a rate that will double current profits in five-to-ten years is heading for disaster. Ditto for services that a distributor relies on to differentiate themselves from their competition.
- Hire self-motivated workers and managers who aren't afraid to delegate authority
If you were to examine the elements of a great company, the top two are producing great products or services and hiring the right people to make it happen. Too many companies are not developing or hiring the right people. Hiring someone with an MBA or doctorate degree doesn't mean they have the skills to perform. They may be highly intelligent and well-schooled, but they often don't really know how the real world works, and their soft skills usually need improvement. They frequently believe a formula or case study they learned in school will lead to success.
The key is finding employees who have the right seasoning in the industry and are self-motivated to achieve success. It's also important that a company's senior executives understand that delegating power and authority is the road to profits. Micro-managing doesn't work as well as empowering key managers who are experts in their assignments.
- Take the long-term view
A company's senior management team also must take a long-term strategic view of its health. Company executives more concerned with short-term profits will never overcome the valleys in the business cycles caused by the outside forces of the economy.
- Know the needs of your customer
Company leaders must be sure their management team makes strategic decisions that focus on meeting the needs of the customer — not just the best interest of short-term conservative profit concerns. Researching the needs of the customer is critical, but many business leaders either don't do it correctly or don't do it at all. I have seen management making important decisions concerning new products/services or programs without the input of customers, channel partners and end users. In many cases, upper management ignores, doesn't request, or doesn't even consider the research when making a decision. Their past history or a very conservative approach drives the decision. If you can determine the needs of end users for the benefits/applications they require, your chances to make a sale increase dramatically.
- Give our customers good reasons to purchase from your company
When I am working with a client for the first time I always ask, “Why do customers do business with you?” In addition, I ask what really separates them from their competitors. In almost every case, the new client's responses are incomplete or uncertain. Shouldn't they be able to easily provide a list of the reasons that make their companies unique? Make sure your sales force knows the benefits of your company's products and services and can articulate them for potential and existing customers.
- Focus on relationship selling
Your field and inside salespeople must devote their energies to building solid relationships with the key buying influences at their customers. Additionally, be sure your executive team buys into relationship selling, too. When a problem comes up at a customer, you will need good relationships in place at all levels of that company to increase the odds that customer will continue to do business with you.
- Strive to provide the best service in your market area
Every time I ask a distributor about the quality of their service they always tell me it's either good or very good. No one says they have the best service in their trading area. For a distributor, service is almost everything so strive to be the best at providing it in your market. During the depression that started in late 2008, did you reduce inventory or add to it? I know of one company that increased their stock and marketed that valuable benefit. The result was that while everyone was down double digits, they were up.
- Don't be afraid of change
If you are not making changes to improve all facets of your business, you will miss opportunities to grow profitably or fail. Change must be the culture that's fed, nurtured and rewarded.
- Make sure your senior executives consider marketing a key corporate strategy instead of giving it a back seat behind cost control
I believe 95% of all CEOs, presidents and COOs are schooled on the operational and financial side of the business. They concentrate on cost controls to make the company meaner and leaner, and focus on improving sales and profits without blending in strategies to develop new products or services that can serve customer needs and differentiate the organization.
- Just sell
More than 30 years ago, I attended a sales meeting in which the speaker played a film that used the Muppets (Jim Henson's creations) to illustrate a key point. A Muppet was dressed up in a three-piece suit as an old-time seasoned CEO, and his job was to motivate the audience by lecturing them on all the factors that needed to be accomplished for this fictional company to succeed. After what seemed to be an eternity of financial, cost controls and operational requests, the exhausted CEO ended the highly uplifting speech with his final statement to challenge all the salespeople in a hysterical pleading voice: “Sell! Sell! Sell your butts off. And forget about the B.S. I just told you. We need orders! Big orders, little orders, fat orders, tremendous orders, thousands of orders, fill-in orders, blanket orders, any kind or orders. The rest will fall into place if you would just sell!”
Stan Rydzynski is an associate partner at Channel Marketing Group, Raleigh, N.C. Give him a call at (631) 864-8470 or drop him a line at email@example.com. If you are looking for fresh ideas on how to profitably grow your business, visit the company's lively blog at www.electricaltrends.com.