Business Management

Do You Understand your competition?

Understanding of your competition is important to the success of any business. Even if your product is unique in the market, there may be other companies offering something a similar product to satisfy the same customer’s need.

The key when thinking about your competition is to learn what makes the customer choose a competitor over your brand. The different options that customers consider are usually competitors.

Competition can be either direct by selling the same product, or indirect by competing for the same market space. The intensity of that competition, whether direct or indirect, will affect the overall potential for success of your business.

It is important to consider all types of competition when planning your business, to ensure that you have the edge over others in your industry.

Direct Competition

Multiple businesses offering similar products create direct competition. Titleist and Nike are direct competitors. That is true of a local plumber and a franchise like Mr. Rooter.

Customers will likely consider a variety of price points, service levels, and product features when deciding where to buy something. However, not all customers will choose the same combination of those options, and that is essentially why competition exists.

Developing a unique positioning for your product/service will allow you to reach a different type of consumer. Competing businesses that target wealthy consumers, for example, are not likely to compete on price, whereas competitors for working-class customers may try to offer the lowest possible price.

Understanding where your competitors are positioned is the key to identifying the gaps that your business can fill.

Indirect Competition

Indirect competitors are businesses that offer slightly different products and services, but target the same group of customers with the goal of satisfying the same need. These can be substitutes or optional spending opportunities.

In the personal entertainment arena a consumer looking for activity may choose to golf, bowling, or take the family to a ball game. In each case the activities compete for the entertainment dollar but satisfy the same need.

Almost all businesses face some sort of indirect competition. Service providers, such as web designers, face indirect competition from do-it-yourself services such as Wordpress and other templates. All of these services satisfy a customer's need to have a web site.

By considering all the possible ways your customers' needs can be satisfied, and creating a strategy for handling that competition, you will create an advantage over other businesses that believe they are unique.

Summary

For any business there is competition in many forms. Using a branding specialist can help you position your product to maximize your market opportunity. Contact Ed Roach – The Branding Expert to improve results.

Ed Roach
ed@thebrandingexperts.ca

Cash Flow Management

Need to Maximize Cash flow?

In these times of a tight economy and when growth is difficult to sustain it is important to stay on top of the company’s finances and to preserve cash.

Here are ways to maximize cash availability in the business.

1.     Track cash flow monthly.

Use a budget to track anticipated cash inflows and outflows so you can assess your situation and react to problems such as the loss of a key sale. This frequent monitoring allows you to delay discretionary payments if necessary.

2.     Monitor financial statements.

Review statements monthly and look for issues. Closely review key indicators of the business’ health including a variance in expected gross margin and inventory turnover.

3.     Work with customers and suppliers.

You can increase cash flow by offering discounts to early paying good customers and preserving cash by having suppliers help by extending payment terms.

4.     Chase the slow payers.

Owners need to be diligent pursuing overdue accounts. If you do not insist on collections you are financing someone else’s business for them.

5.     Protect working capital.

If cash is tight don’t pay for long term investments in equipment. It is better to use debt to finance these projects. Debt can be used to re-finance fixed assets to free up capital.

6.     Cut waste.

Make every effort to improve productivity, eliminate inefficient equipment and other sources of waste. Engage staff to get involved in developing solutions.

These suggestions may help improve that most vital business tool – cash flow. Agree?

Gerry@polarisgroupmc.com

Business Ethics

One of the more important attributes for small business success is practicing with carefully developed principles of high ethical standards. When practiced throughout the organization it becomes part of the image of the company and can be an important factor in overall success and how the community views the business.

In the research study, "Does Business Ethics Pay?" by The Institute of Business Ethics (IBE), it was found that companies displaying a "clear commitment to ethical conduct" consistently outperform companies that do not display ethical conduct.

The following are excerpts from that study that I believe merit consideration:

1. Be Trustful: Recognize customers want to do business with a company they can trust; when trust is at the core of a company, it's easy to recognize. Trust defined, is assured reliance on the character, ability, strength, and truth of a business.

2. Keep An Open Mind: For continuous improvement of a company, the leader of an organization must be open to new ideas. Ask for opinions and feedback from both customers and team members and your company will continue to grow.

3. Meet Obligations: Regardless of the circumstances, do everything in your power to gain the trust of past customers and clients, particularly if something has gone awry. Reclaim any lost business by honoring all commitments and obligations.

4. Have Clear Documents: Re-evaluate all print materials including small business advertising, brochures, and other business documents making sure they are clear, precise and professional. Most important, make sure they do not misrepresent or misinterpret.

5. Maintain Accounting Control: Take a hands-on approach to accounting and record keeping, not only as a means of gaining a better feel for the progress of your company, but as a resource for any "questionable” activities. Gaining control of accounting and record keeping allows you to end any dubious activities promptly.

6. Be Respectful: Treat others with the utmost of respect. Regardless of differences, positions, titles,ages, or other types of distinctions, always treat others with professional respect and courtesy.

Recognizing the significance of business ethics as a tool for achieving your desired outcome is only the beginning. A small business that instills a deep-seated theme of business ethics within its strategies and policies will be evident among customers. Its overall influence will lead to a profitable, successful company.

I believe there is merit in the values expressed in this study. Please let me know what you think.

Gerry@polarisgroupmc.com

Are you thinking of using a mentor?

Any business thinking about using a mentor to get back on track to the path they expect to lead to more success should spend time defining their current position and what their expectations for future success may be.

Here are some thoughts you may want to consider and a good mentor may help sort through these to get you on the right pathway more quickly.

1.     Where do I stand today?

How is my business positioned vis-a-vis competition and am I achieving my goals? Do I have clearly defined and measurable goals? You need to be able to clearly see today’s picture not only for an outsider who may be a mentor but so you understand your own opportunities to grow.

2.      What are the organizations strengths that facilitate achieving our goals?

The core strengths of the business should be reviewed to ensure you are capitalizing at the highest level achievable. Can the business grow further using these strengths?

3.     What weaknesses exist that inhibit growth?

Can you objectively assess organizational weaknesses that are roadblocks to success? They may be staffing issues, operational deficiencies, or capital shortages that slowdown growth potential. 

 

4.     Can you implement changes to achieve a higher plateau?

An examination of the earlier questions can help determine the focus needed to achieve the desired results. This alone does not solve the problem; the organization needs to be able to re-focus on new priorities and be able to cope with change. Strong management leadership is needed to ensure all levels of the organization buy in.

 

5.     Will a mentor help?

After completing the internal review it may be useful to have the support of an outside mentor that can be an additional objective catalyst to facilitate needed change. Often that additional viewpoint accelerates the pace to moving back towards the path that will allow the organization to fulfill its potential. If you choose a mentor for assistance be clear in stating  your needs then listen carefully to the mentors advice.

There are many mentors that might be used and I believe Lora Crestan is an excellent option for anyone in the Southwestern Ontario area. Lora can be reached at:

lora@loracrestan.com       

519.735.6820

www.loracrestan.com    

 

Business Management

Managing Change

Managing change in an organization is crucial if the business is to move forward with adapting any new structure or shift in business focus needed to realize its goals of growth and profit improvement.

Here are a few thoughts on areas management needs to focus on to implement and manage change in the organization.

1.     Responsibility.

Clearly management of change rests at the senior levels of the organization. Employees have the responsibility to try and accept and help implement changes which need to be communicated clearly so employees understand the purpose and how it impacts on their individual roles.

2.     Involvement.

            Management should involve employees in the changes – it is never a good idea to just          
              impose change from the top.

3.     Understand

Knowing where the organization is and understanding where you want to be at a specific time, why, and what steps are needed to achieve the goal are all critical steps. 

4.     Plan.

The organization must develop a plan that is achievable if management is going to be credible. The plan should set out stages for implementing change in phases that are not only achievable but measureable. 

5.     Communicate

This stage cannot be overly stressed. Clear communication of objectives, involvement of people, at the early stages, and enabling of employees will facilitate involvement and buy in for the company.

It is obvious to most business owners that people matter. Sometimes however the organization gets lost in plans and processes rather than facing the difficult and more important people issues. Making the initial steps to involve the entire organization starting at the top will help achieve success.

I’m always happy to hear your thoughts.

Gerry@polarisgroupmc.com