How Do You Protect Your Business In An Expanding Market?
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How Do You Protect Your Business In An Expanding Market?
If you have a business in an expanding market like many of the cities in Southern California, or Phoenix, or Dallas -- a major concern has to be protecting your business as new competitors arrive.
By: Art Consoli
If you have a business in an expanding market like many of the cities in Southern California, or Phoenix, or Dallas -- a major concern has to be protecting your business as new competitors arrive.
By: Art Consoli
This can be especially frustrating if you’ve been there awhile. Maybe going all the way back to when it was just you and one or two other competitors.
Too frequently business owners unknowingly change their focus. They see a new guy come to town and they immediately think about how they can keep him from becoming successful. While a second location may have been on their mind, now that they see a competitor opening up, they panic and rush to get an expansion going. Many times this leads to selecting a poor location or moving ahead with less than sufficient resources (capital and people.)
The owner may have a fine, growing business with profitable sales handled by skilled, well-trained employees. But fear sets in. He or she worries that this new operator may take all their business, their employees and leave them right were they were when they first started out.
While it is definitely possible that number one in town may have gotten a little complacent, a bit out of touch with his customers, or maybe even overly cautious in taking on new products or other revenue generators and as a result -- the fear is justified. In that case the heir to the throne provides a much needed wake-up call.
Assume for the moment that is not the situation. The older, established business owner has been doing all the right things. He has been working his business plan. That’s right the continually updated plan he began with, which he has routinely changed to reflect what he learned from his visits to the trade shows and his association’s meetings. The projections have been updated and the assumptions on which the new revenue numbers were based were constantly reviewed for accuracy. Changes were made when appropriate.
With this document he has always had a plan for the future. A new competitor just needs to be reflected in the assumptions.
The point here is that if the market is growing around you, trying to keep the same percentage of the market may be a bad idea.
I suggest that focusing on maintaining and increasing profit margins should be the priority, not chasing sales. Revisit costs and processes, upgrade equipment, spruce up and clean up to put a fresh face on the business.
We have lots of examples to observe. The successful fast-food operators keep their focus. McDonalds strayed a bit when it went all-out to increase the number of its locations (and keep in mind, it’s really in the real estate ownership business.) They soon woke up to the fact that sales were off and poor products and service were to blame. Burger King says “nah” to counting calories and comes out with an even bigger Whopper.
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Too frequently business owners unknowingly change their focus. They see a new guy come to town and they immediately think about how they can keep him from becoming successful. While a second location may have been on their mind, now that they see a competitor opening up, they panic and rush to get an expansion going. Many times this leads to selecting a poor location or moving ahead with less than sufficient resources (capital and people.)
The owner may have a fine, growing business with profitable sales handled by skilled, well-trained employees. But fear sets in. He or she worries that this new operator may take all their business, their employees and leave them right were they were when they first started out.
While it is definitely possible that number one in town may have gotten a little complacent, a bit out of touch with his customers, or maybe even overly cautious in taking on new products or other revenue generators and as a result -- the fear is justified. In that case the heir to the throne provides a much needed wake-up call.
Assume for the moment that is not the situation. The older, established business owner has been doing all the right things. He has been working his business plan. That’s right the continually updated plan he began with, which he has routinely changed to reflect what he learned from his visits to the trade shows and his association’s meetings. The projections have been updated and the assumptions on which the new revenue numbers were based were constantly reviewed for accuracy. Changes were made when appropriate.
With this document he has always had a plan for the future. A new competitor just needs to be reflected in the assumptions.
The point here is that if the market is growing around you, trying to keep the same percentage of the market may be a bad idea.
I suggest that focusing on maintaining and increasing profit margins should be the priority, not chasing sales. Revisit costs and processes, upgrade equipment, spruce up and clean up to put a fresh face on the business.
We have lots of examples to observe. The successful fast-food operators keep their focus. McDonalds strayed a bit when it went all-out to increase the number of its locations (and keep in mind, it’s really in the real estate ownership business.) They soon woke up to the fact that sales were off and poor products and service were to blame. Burger King says “nah” to counting calories and comes out with an even bigger Whopper.
Page 2
Art Consoli's unique background and skills allow him to speak and write about how someone with limited experience can do a self-evaluation which will let him decide which business opportunity is best, how to evaluate opportunities and gain control over the one which offers the greatest potential and then manage that business to success. Readers of his book call and write to tell him how much his book has helped their lives and improved their business. The author can be reached at www.businessstrategyartconsoli.com.
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