Staying Afloat In A Competitive Business Environment

Our streets, roads, the print and electronic media are awash with different offers from manufacturers and service providers. The one I enjoy so much is the one between the phone manufacturers. The competition is so hot that Apple and Samsung had to extend their “fight” to the court room 🙂  I also read online that one major phone manufacturer, and a one-time major player in the phone business, has been having some “survival” meetings with some organisations. How sad! But that is the nature of business. It’s like a game – no pity for the opponent and all the players cannot be winners.

As a consumer, I love competition for so many reasons. It affords us the privilege of having alternatives to choose from; it forces businesses (serious-minded businesses, if I may add) to see consumers as being the most important factor to consider and hence, be the focal point in business decision making process; it makes pricing to be at consumers’ advantage; it forces businesses to constantly seek for their loyalty; and it forces businesses that are not quality-conscious, to have a rethink……The benefits continues……

No doubt, as consumers are enjoying these benefits, businesses grapple everyday with the art of “out-smarting” one another in a game, an interesting one at that, that involves winning as many customers as they can, over to their side. Sadly, the inability to cope with competition is a major reason why so many businesses all over the world are finding it very tough to operate, and in extreme cases, many have “crawled” out of existence!

Competition has been the bane for so many businesses that have either not mastered the tricks of the game; cannot withstand it or have simply believed that businesses can survive on luck, mediocrity or chance for so long.

I got the urge to do this post after my wife started complaining that the number of businesses competing with her was rising every day. The fact is that the only way to avoid competition is to “close shops.”  Aside from legal monopolies (organisations given the legal power to be the sole producer or seller of a product/service), every business attracts other businesses in the same line of trade. Even where turnover/profit is not encouraging, or where a business enterprise is creative and launches an entirely new product or service, other people/businesses would still join the market and create competition.

So, since competition is inevitable, and the foundation of competition is “winner takes all,” what will a business do?  Apply for a legal monopoly status? 🙂 Well, I am not aware of any country where that is done. Cut corners? That too, is not a good business option as it is a short-lived solution that can even boomerang. So, what’s my take on competition?

Below are six [to avoid putting up a very lengthy post] of the tips I shared with my wife…..

1. See business like a boxing match. In a boxing match, boxers fix their eyes on each other to counter every move of the opponent. In doing this, they have to be alert and conscious of their environment – a case of complete alertness. Thus, businesses have to constantly be at alert – conscious of, and pre-emptive of competitors’ actions and inactions. I feel this among phone manufacturers this days. To me, competition among phone manufacturers is  good case study for my post.

2. Do something extra.something special.  Make your product or service very outstanding. Relate with your customers in a way your competitors are not known for. Give them a very competitive price, without lowering standards. Use marketing campaigns and strategies that your competitors have not explored or have not even thought of. Give your customers reasons to stick to you and give your competitors‘ customers reasons to cross over to you.

3. If making huge profits was your major focus, think of this : while you are busy chasing money, your competitors are busy strategizing on increasing customer base, including, of course, winning the hearts of your own customers over. So, my take on this is: re-strategise by making customer-focused strategies to be your main focus.

4. Where you do not see your customers for a while, do not wait for them. Reach out to them. In this age of high tech communication, distance or large number of customers is not an acceptable and reasonable excuse.  By just by clicking “enter” or “send” on your computer or mobile device, you can reach millions of customers. A simple message that reads : “Hi valued customer. I/we just want to wish you a splendid weekend” can go a very long way in reawakening a dwindled customer loyalty.

5. Every consumer loves convenience. Think of ways you can create convenience for your customers. There are many ways that this can be done. This however depends on the nature of your product. You can carve out time for home service, break bulk, arrange for delivery of the goods to the door-step of the consumers, ease usage, among others. All of these are aimed at satisfying different groups of consumers rather than seeing the entire market as being the same.

6. There is no doubt that the human resource “drive” an organisation towards growth, stagnation, decline or eventual collapse. It becomes MANDATORY therefore for businesses to engage and maintain(through motivation and excellent welfare and staff development packages) goal getters and workers who understand what business growth and success is all about. Thus, merit and not nepotism or sentiments should be a business’ over-riding criteria in employment.

Of special mention here, is the caliber of the CEOs and top management personnel who take far-reaching decisions affecting the entire business. This days, wrong choices of who pilots the affairs of a business would be a costly mistake as it could place a business on the path of failure, stagnation, inability to stand competition, and then collapse.

I hope you found my tips useful.  I would like to read your reactions 🙂

Thanks a lot for your time and wishing you loads of luck in your business 🙂

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Make Or Mar Ability Of business Locations : Looking Beyond The Consumers

Lagos, Nigeria

A beautiful environment with basic infrastructure is good for business (Lagos, Nigeria)

In my last post on business locations, I only focused on customer considerations in deciding on where to locate a business. Even as crucial as the consumer factor is, there are quite a number of other factors to put into consideration. It thus follows that even where an area is considered as a consumer hot spot, other equally important factors might make the choice of that particular location, a big error.

One very other very important factor to consider is the availability basic infrastructure such as power, roads, communication, transportation, water and much more. I do not see a business doing very well in a location where power supply is non-existent or very unreliable. Power supply, whether hydro, gas or solar, is like blood to a business. Its absence causes a lot of problems to businesses since most business equipment need power to function. You can imagine what businesses that actually need power to render their services or sell their products, would do where there is no public power supply, or where it is unreliable.  They would definitely need to generate their own power, usually at a higher cost. This would eventually have multiple chain consequences on the business – meeting up with other business expenses might be hampered, especially salaries, asking for a raise might be an “abomination,” re-stocking might be affected which can lead to stock-outs, stock-outs deals a bad blow on sales, low sales means low profits; dwindling profits, if it persists, leads to stagnation and eventually, collapse, in severe cases. A number of businesses have packed up because of this singular factor – power!!!

Good roads and transportation are essential to business (Lagos, Nigeria)

Good roads and transportation are essential to business (Lagos, Nigeria)

The state of transportation and roads and their networking, play very vital roles in the life of businesses. Businesses that are into manufacturing and buying and selling cannot but give serious thoughts about it. This is obviously because of their frequent movement of goods, in and out of the business premises. No doubt, roads also have impact on the life span of motor vehicles and their maintenance cost. Again, these also have chain consequences on the business.

The way businesses are being run today, communication is almost as important as money in business. Technology has changed the way communication is being carried out. The level of development is not the same everywhere. In some areas, communication services, in particular, the internet is far from being developed or reliable. This kind of situation will not speed up business growth. This kind of situation would also prevent the business from meeting up with global trends.

Security is another crucial issue. Insecurity is a very is a big enemy to anybody, let alone a businesses that needs people to come around for deals to be struck. Insecurity restricts movement, creates a general feeling of fear and anxiety; and in extreme cases, reduces the number of current and potential customers through deaths, particularly in areas experiencing wars and terrorist attacks.

Another vital factor to consider is the cost of labour. Labour costs seems to take a huge chunk of running expenses. A smart way out of this is to consider areas where labour cost is cheaper. Apart from having access to more eligible workers, running cost is greatly checked.

Government policies also affect businesses. Ignoring them might make the business to be at the mercies of the government later. Policies on taxes and fees, what is legal and what are not, personnel issues, business records, business hours and much more, have effects on business. Experience has shown that the “friendliness “of these policies defers from place to place. So, if you want to start up a business or you want to relocate, you might want to find out which location would have greater friendly government policies.

A business whose daily turnover is usually on a very high side would have to be security-conscious. One smart way of doing this is to look for a location that is close to banking facilities. This enables frequent movement of cash away from the office to the banks, which is considered safer.

In addition to these, businesses that see their employees as key to the success of the businesses, would be see it very necessary to consider easy access to health facilities when making location decisions. Employees give in their best when they have a feeling of care and concern coming from their employees.

Another important factor to consider is the cleanliness of the chosen location. A dirty location poses health hazards to everyone that has something to do with the business. If the business is into food processing, a clean environment would be their best best. A dirty environment therefore keeps people away. Such businesses also run the risk of constantly having problems with government health officials.

Finally, it might also be very important to consider competitors in making location decisions. The world of business, as we have it today, is a very competitive one. Some businesses merely exist. Some have intimidating profiles and stature. Some will attract customers which eventually strike deals with rival businesses. Some are serious threats to competing businesses that make the mistake of coming so close to locate their businesses next to it. A serious appraisal must be made of these realities.

In all, together with the first part of this post, it is obvious that businesses that are very successful today have actually done their homework very well.

I sure hope this post was worth your time.

Thanks for your time.

Related posts :

Make or mar ability of business locations : The consumer factor

Small businesses’ practices and the issues stagnation and growth

Decision making : The sensitive and far-reaching function of a manager

Small businesses’ practices and the issues of stagnation and collapse

Image courtesy jscreationzs/FreeDigitalPhotos.net

Image courtesy jscreationzs/FreeDigitalPhotos.net

I have been very fortunate to have worked in all sorts of businesses: small ones, medium sized ones, blue chips, collapsing ones, and very solid ones. As a University of Cambridge Advanced Business studies lecturer, I have had to carry out series of studies on business failures and successes. The combination of these experiences is basis of this blog post.

There is no generally acceptable definition of a small business. It is safe to say that this very important element in every economy can best be defined by their peculiar features.

Small businesses are known for the following features:-

*Small startup capital requirement

*Operates without a staff or one or two staffers

*Small office space

*Small stock up – for those businesses involved in buying and selling

*One-shop set up – no branches

*Very small assets value, including bank account

*Uses less of modern equipment and tools, especially the internet

*Inconsistencies in business practices

*Low turnover

*Low profits

The list above is inexhaustible. No doubt, there are many small businesses today which have become global players. Facebook, Microsoft, Yahoo!, Google, Apple Computers (and a host of other global names), did not start from the top; they all started from the scratch.

If these businesses can be this successful, why is that many small businesses never leave their starting point, or worse still, later collapse. The following are my findings (it is important to note that for some businesses, a combination of these factors could be their problem; for some, a single factor could be their their problem):-

Inability to raise good capital:- Capital is the life blood of the any business. Where it cannot be sourced, or where enough cannot be sourced, then there is a serious attack on growth. This is because, every additional investment that is made in a business is a potential for future growth.

Modernization has made the issue of business financing less stressful and diverse. Here are some finance options open to small businesses:-

*Loans from friends and associates or micro finance banks.

*Thrift and credit societies for soft loans.

*Credit purchases.

*Equipment leasing from firms that are friendly to small businesses.

*Debt factoring.This involves selling of debts to finance firms like banks

*Ploughed back profit or earnings.

*Selling of disposable properties.

*Soft hire purchase arrangements. This is also an alternative to buying properties.

 An analysis of these options will have to be done before a decision is made. The terms of each option are usually a major guide.

One of Mark Zukerberg’s secret of success was getting good capital to push his dreams further. In 2005, Accel Partners, a venture capital firm invested $ 12.7 million into Facebook, which at the time was only open to Ivy league students. This led to a huge expansion of the network.

Giving priority to huge profits as against growth:-  I am one of the very strong followers of the late Apple boss, Steve Jobs. I have read many articles on him and I love listening to him because his words always contain strong meanings and implications. He once said that ‘’being the richest man in the cemetery does not matter to me. Going to bed at night saying we’ve done something wonderful ‘’ is ‘’what matters to me.’’- (Craig Biddle -theobjectivestandard.com) Doing something wonderful would certainly require you to do something, not because of the money, but because that is what you really want to do. It also means you are not following the crowd to do what they are doing. This helps you to stay focused and always wearing your thinking cap. When this happens, all your efforts tend towards success and growth, dwarfing the motive of money-making.
Not having a Sellable product:-  Not every product is sellable. Surprised to read this. Every product has its time and location. A wrong time and location will surely jeopardise growth and may eventually snuff life out of a business.  Wrong timing of product release and location of small business has been a major setback for so many of them.  It slows down growth and if the situation becomes severe, it may lead to a collapse of the business.

Closely related to this is the issue of quality. It is a matter of time when even the less privileged ones in the society will turn their backs on sub-standard products. They do not last long. Food items might lead to health issues. This causes a drift to another product, no matter how cheap. The cycle continues. Growth will be a miracle in this situation. And when stagnation persists for so long, collapse cannot be ruled out. High quality is a major reason for the huge successes recorded by the small businesses started by Jobs, Gates, Zuckerberg, Page, Filo, Yang and several other blue chip companies worldwide that started from the scratch.

Not surpassing your competitor in what you are selling :- The world of business is premised on the principle which recognizes the fact that for every business you want to go into other people are either doing it or will join you in that line of business later. So, survival is the order of the day. Surpassing your competitors is like a game of football where you have to get the ball pass all the players and goal keeper and then score. That means you have to very outstanding in your business practices. A great achiever, Steve Jobs, has this to say in this respect: ‘’ the only way to do a great work is to love what you do. If you haven’t found it yet, keep looking….And like great relationship, it gets better as the years roll on.’’ – (Craig Biddle –www.theobjectivestandard.com). For small businesses, this could be, and has been an uphill task.

Very poor record keeping, especially financial records: – I liken the very poor record keeping habit of small businesses to the AIDS virus!!! Why? On the face of it it looks as if all is well with the business. But unknown to the business, a problem exist which is unknowingly affecting many aspects of the business. Poor record keeping is the major reason why :-

*A fraud can occur and the entrepreneur may not  know on time or may never know

*There might be a stock out and it is not known on time

*The entrepreneur may not be able to take sound investment decisions

*The entrepreneur may not be able to control expenses

* He may constantly have reconciliation problems with creditors and banks

*The entrepreneur may never be able to state his financial at any  time

* He may never be  able to know whether he is  running at a profit or loss

*The entrepreneur may never be able to tell how much his turnover in a year is

*The list goes on and on

Meanwhile all seems well with the business. A close examination of the practices above will show that each of them are clogs in the wheel of progress of any business for that matter, worse still , if the business is a small one.

Having incompetent or inexperienced assistants/partners/workers:- Human capital is the most crucial of the resources an organization can put together. No matter the kind of sophistication in your business machines, very high quality goods and services, fantastic business ideas, wonderful location, and the like, it takes human beings to transform all of these into business growth and success. The success stories of   Gates (Microsoft), Mark Zukerberg (Facebook), David Filo and Jerry Yang (Yahoo!), Larry Page and Sergey Brin (Google) and Steve Jobs (Apple Computers), cannot be complete without the mention of some names of some very brilliant people and reputable organisations. Thus, slow progress or imminent collapse may definitely creep in where a business is made up of people or organisations that cannot drive the business towards growth.

Lack of foresight:-One key business skill is the ability to predict the market. Inability to do this creates constant shock-effects on the business. This is similar to the same effect a shocking situation has on a human being.  Too much of this shock-effect can be every inimical to a business. Having foresight enables the entrepreneur to plan and prepare ahead. It reduces too many stop-go situations. This is a situation where an unforeseen event creates a serious problem in the business which requires a complete change in the business, and starting a new line of practices becomes inevitable. If this happens often, progress will be deterred and imminent collapse cannot be ruled out.

One of the strongest points of Microsoft was that Bill Gates’ career has been marked by his incredible vision. Microsoft beat out the competition largely because they were always looking one step ahead, to the next revolutionary idea. The lesson is: if you want to get ahead in business, think ahead.

Inability to move with the times/changing global events: – Global events are changing at a very fast pace. Business techniques, methods and practices are fast changing at a per-second-basis. Information on better ways of doing business is being updated on a per-second-basis. The internet has made things even more difficult for small businesses that cannot have adequate access.  The result is that businesses that cannot meet up are put at a disadvantage, with the resultant consequence on growth and overall business success.

Poor marketing skills:- The whole essence of marketing is to bring about a sale. Marketing activities are very wide. Poor marketing skills slows down growth to a very large extent. Some of the marketing activities/practices expected of businesses includes :-

*Product issues – proper packaging, right colour, right size, right quality

*Pricing  issues – setting the right prices

*Distribution issues – excellent distribution plans

*Promotion issues-choosing the right type and mix of

promotional tools.

*Excellent customer relations.

Poor staff relations:- Lastly, where the business can employ a staff, the staff MUST be well taken care of. The entrepreneur must have a good relationship with the staff. Staff welfare must be a priority. A happy worker is more dedicated to his job, loyal, and less prone to criminal tendencies. Where the reverse is the case, the business suffers for it. The staff sees himself as a salary-worker who only works for his salary, with nothing at stake. He is less dedicated and more prone to criminal tendencies. All these and much more adversely affects the business.

A careful study of the above research findings will not only be very useful to small businesses, but the following businesses:-

*Failing business, i.e., businesses going through difficult times

*Medium scale businesses that want to grow

*Big businesses that have been facing challenges.

*New businesses or those coming on board

Good luck to us all and thanks for your time.