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Ken Keller: A new year, a new mindset

Brain Food for Business Owners

Posted: November 9, 2010 5:10 p.m.
Updated: November 10, 2010 4:55 a.m.
 

About fifty days remain before the start of a new year. It is a good time to review, renew and refresh not just how the business is doing, but how business is being done. Here are six critical areas to keep in mind as planning begins for next year. 

First, redefine what business the company is in.

Railroads were once in the transportation business, but now, with the exception of Amtrak, they are in the freight-moving business.

Walgreens was once a drug store. By taking advantage of convenient locations and hours for consumers, it has morphed into a smaller, friendlier mass merchandiser, selling grocery items, soft goods and alcohol in addition to over the counter and prescription drugs.

What is your business?
Without a vision, the goals established for any business are not likely to be accomplished. Second, it never hurts to revitalize the vision statement. Businesses that get beyond survival stage grow in large part because they have a vision. The owner is not misled by circumstance, but instead provides a destination for those that follow him or her. 

Is the destination clear?
How much progress has been made this year? How much progress is anticipated in the year ahead? Does the vision reflect reality? Is it filled with energy, direction and focus? Are employees able to state the vision statement? Is it memorable enough to be memorized?

Organizational vision
Third, review the company’s sustainable competitive advantage. Wikipedia defines this critical element as: “Competitive advantage occurs when an organization acquires or develops an attribute, or combination of attributes, that allows it to outperform its competitors.”

Creating a sustainable competitive advantage isn’t done from the inside out; it is done from the outside in.

Prospective customers chose to do business with a vendor because that vendor provides something, either tangible or intangible, not provided by other vendors. Clients continue to stay with a vendor for specific reasons. The answer is finding out the “why” behind those decisions.

Sustainable advantages

Fourth is avoiding the commodity trap. Many owners believe that their offerings have become “commoditized by the competition” whereby the product is distinguishable by attributes and pricing.

Pricing pressure seems to have taken over as the key decision behind customer purchasing. Owners don’t see any way out of this trap and expect more of it in the future.

Wikipedia defines a commodity as “a good for which there is demand, but which is supplied without qualitative differentiation across a market.”

Commodities aren’t just products anymore; services are just as vulnerable as products to fall into the price trap. When a buyer cannot discern a qualitative difference of offerings, price becomes the only factor in the decision to spend. 

Business owners are often guilty of double-speak. While working very hard to differentiate value to prospects and customers, owners turn right around and make purchases based on price from their own vendors.

The challenge is to build value, which matters for the buyer, into the purchasing equation. Former, current and potential buyers can provide invaluable information to help strengthen the existing sustainable competitive advantage and also provide insight into what constitutes value for the customer.

Review and refine
Fifth, review, refine and redefine the target market of the company. Who is the perfect customer? Has the customer base changed? Who is making the buying decision? Are there multiple buyers involved?

Identify target market
Finally, there are three key documents worth creating or updating when proceeding through the review process.

The first is the strategic plan for the company; the second is the marketing and sales plans and the third is the operating plan for the year ahead.

Do you posses these critical documents and if not, when will you create them?

Avoid the insanity

The definition of business insanity is “doing the same thing over and over and expecting a different result.” If you expect a better year in 2011, try adopting a new mindset to help move the business forward.

Ken Keller is president of Renaissance Executive Forums, helping top executives make better decisions through informed peer perspective, resulting in better top and bottom-line results. He can be reached at (661) 295-6892 or  KKeller@ExecutiveForums.com. Mr. Keller’s column reflects his own views and not necessarily those of The Signal.

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