Posted on October - 06 - 2010

Aim High (Enough)

Watching an exchange on Twitter earlier this week made me think about the distinction between businesses at the bottom of the market and equivalent businesses in the same industry at the top of the market. Some say that the income of a small business owner is the average of the people that he or she spends most time with. This presents a challenge if we want to:

  • Grow our businesses

  • Create and maintain a quality image that matches our aspiration

  • Have the confidence to charge the rates we feel we deserve

  • Have the courage to break-away from unsustainable business models

Average Is Not Enough

If we perpetually measure our business against the wrong competitors, we will either:

  • Set our standards of service and product too low to give us the success our hard work justifies.

  • Aim our standards (and prices) at a level which we cannot justify – leading to an inevitable reduction in profit.

Choose the Right Competitors

When planning for the future, it always pays to conduct a reasoned competitor analysis – to make sure that we are not being left behind by more creative competitors with better business models. In doing this work, it is essential that we choose the right competitors to benchmark against our own business. Choose a competitor in the “cheap and cheerful, I hope it works” category and that is where we might drive our own businesses. Choose a competitor that is way out of our league and we run the risk of attempting to emulate a business model that we cannot ever hope to create with the money, skills and people available.

By choosing the right competitor – ideally businesses that are one or two divisions above than our own, we can be more confident that we will start to drive the right kinds of improvement work in our own business.

Areas to Consider

  • Value model – The combination of products and services together with how they are delivered and charged for.

  • Sales process

  • Pricing structure

  • Portfolio

  • Products

  • Services

  • Affiliates and associates – People you refer to and people you rely on to complete your offer; Suppliers; Complementary businesses; Additional services

  • Those little extras

This was a guest post by Paul Fileman of Results-Zone. Results-Zone bring extensive knowledge and experience gained in Blue Chip organisations to businesses like yours. They ensure that your business is fully exploiting a well thought through operating plan. They work alongside you and your team – as business results managers. They ensure that your team and your business are elevated to the results-zone. They bring you “hands-on” experience – similar to employing high quality management skills without the risk or costs in recruiting full time employees.

 

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