The Facts of Business Life (41 page)

But at the end of the day, it's your products or services that customers come for and, hopefully, come back for. No matter how well your employees treat them or how efficient your internal systems are, if you don't have something customers want to buy, you aren't going to have much of a business, much less a successful one. A great example of this is Firestone tires. For years Firestone retailers had a reputation for quality, aggressive pricing, and selection. But in the late 1990s, Ford Explorers had rollover issues and it was determined that Firestone tires were a factor in the rollovers. As a result, Firestone's business dropped off the cliff. Overnight, every Firestone dealer learned the importance of product and what the loss of customers and their confidence could mean to a business. Although this might seem like an extreme example, it's unfortunately not all that unusual. It does, in any case, point out the fact that in the war zone, if you don't have product power, you don't have anything.

If you look at virtually any successful company, you will see that a great sales operation invariably goes hand in hand with a good business operation. That means that in order for a company to move from the survival to the success end of the spectrum, the internal business operation has to do its part in supporting what is happening on the front lines of the war zone. That is, internal processes have to be effective and, perhaps even more important, relevant to war zone participants and your customers. Moreover, your talent, and the talent of your key employees, is reflected in the processes you design and how aggressively and enthusiastically your employees operate them. Processes bring efficiencies and coordination to any business and eliminate the problem of the “left hand not knowing what the right hand is doing,” as well as the embarrassment and frustration that inevitably follow. Perhaps most important, how well your war zone processes operate is a major factor in determining whether you will achieve your net profit goal.

But having a well-run business is about more than just that, and the Firestone story provides a good example. The first casualties of the Ford Explorer problem were the Firestone owners who had sloppy business operations, and those who just relied on selling tires. Not surprisingly, the better operators were the ones who, prior to the emergence of the problem, not only sold tires but pushed their businesses to find other ways to make sales and gross profits, that is, those who diversified. In other words, the retailers who survived the storm were those who weren't dependent on just one item but also sold accessories, provided car maintenance, or offered other products or services. The point is that if a business is well run, it can withstand unforeseen events as long as its owner has learned to be innovative with its products and continually find ways to expand its business and profits.

To succeed at Level 3 an owner obviously has to demonstrate his or her competitiveness to the market. That's a given. But an often neglected and important aspect of success is getting your employees to be equally competitive. The customer who walks in the door, calls on the phone, or sends an e-mail should be your employee's main focus. All owners want this to happen, but in practice it rarely does. And the reason it happens so infrequently is that your employees' performances are more important to you than they are to them. But there is a way to change that. It's called internal competitiveness, and it's another element of the X factor.

Virtually all professional athletes exhibit internal competitiveness. In fact, professional teams have it down to a science—the science of statistics. Statistics are fundamental to sports because they enable players to measure themselves and then work to become better, that is, more competitive. And it can work as well in business as it does in sports. By focusing on results versus expectations, both employees and their managers can see where the employees are strong and where they can improve. And since most employees want to improve, if you show them how to do it, they will repay you by becoming more competitive.

Another particularly good way to get your employees to be more competitive is to be more competitive yourself. Competiveness is like measles—they are both contagious. What this means is if you show your employees that you like a market showdown, and show them what and how they can improve, most of them will become enthusiastic and step up their game. At the same time, it's important for you to remember that, for an owner, being competitive doesn't come cheap or without risk. If you want more sales and profits, you have to be willing to take chances. For example, in order to increase sales, you usually have to increase your marketing and advertising budget, add more personnel, add to your inventory, or spend accumulated profits on equipment and other capital expenditures. In other words, becoming more competitive costs money, which increases your risk as well as your possible rewards. To my way of thinking, though, if you have an accepted product, a well-run business operation, and especially competitive employees, you should be “pushing the pedal to the metal.” And there are a number of ways you can do that.

Among the less risky efforts you can make is to offer specials on certain products, expand your inventory and create a well-designed sale, or target a specific area in your market where sales have been weak in the past and you know you can improve on them. You can also become more aggressive in pricing and/or advertising on a product you're well known for in order to capture more market share, which will in turn draw more customers and give your staff the opportunity to sell them related products or services. However, if you are willing to take a chance—and you should be—there are more aggressive, and potentially more rewarding, efforts you can make.

One of these is expanding your business or adding new products or services. Expanding can mean adding another location or enlarging your current facilities, but either way you will give yourself the opportunity to increase sales, which in turn can get your employees excited about possible promotions, and raise their confidence level not only in the business's future but also about their place within the company. In fact, you can even get your competitors' employees—particularly the good ones—thinking about your company as an employment option. You can also add new products or services, like the Firestone dealers who sold accessories to go with the tires and offered additional services to their customers. The bottom line is that while expanding your business does mean added risk, it also tells both the market and your employees that you're a force in the market and that you're dialing up the competition.

Another, more aggressive way of increasing sales is to buy a competitor. In fact, this might be the most aggressive competitive move you can make. It is a strategic way to quickly add market share, customers, and, hopefully, some great employees. And if purchasing a competitor provides you with economies of scale, you can become more efficient overall and make both companies exponentially more profitable. It also means, though, that some competitors will step up their game to meet your challenge in whatever ways they feel comfortable, whether it be with price, selection, quality, service, or other means. Some of those competitors will be able to keep up, but some will fall behind. Even those who fall behind, though, can provide you with an advantage. Not only can you target their customers, their weakened states could make them additional opportunities for ownership.

Most people think of being competitive as having great prices, large inventory, quality products, or other similar characteristics. These all help, of course, but being competitive in business also means being internally competitive and getting better every day. Over time, your business's overall competitiveness sets it apart from most of your competitors and gives you the power and financial strength to take the war zone battle to others, on your terms, and make the kind of net profit you can be proud of.

You will have attained Level 4 when your business has consistently achieved your net profit goals over a period of time. And when it does, you might think you can lie back and rest on your laurels. Unfortunately, you can't. The fact is that you still have a challenge to meet. That challenge is no longer trying to
become
successful but, rather, trying to
remain
successful. And this is a formidable challenge, because the trappings of success will more than likely have changed both you and your company. That is, the drive for success both you and your employees once had will begin to fade, so much so, in fact, that you could find yourself back at Level 3 fighting not for success but for survival. Unfortunately, there's nothing particularly unusual about this—it's a natural tendency. The constant fear of failing you once had will have been replaced by the satisfaction success brings. But as a result, the aggressive, competitive, fast-moving company you had when you were approaching the success end of the spectrum at Level 3 is not the same company you have now. In the war zone, though, your business is always under attack because competitors want your customers, just as you want theirs. And that means that you have to keep fighting, albeit with some different weapons.

Maintaining success essentially requires you to do two things. The first is to take what the war zone gives you, and the second is to not dwell on what the war zone takes away. That is, you have to be quick to adapt to new market opportunities and just as quick to respond to any problems that may arise. And doing so may require you to make internal adjustments, which in effect can mean changing the composition of your business. For example, being able to adapt quickly to new market opportunities means you should be constantly looking for ways to bring in additional revenue. This means that if you are a heavy-duty truck dealer, you could expand your service department from one working shift to two, which would not only attract some after-hours emergency work but would also help your current service customers by giving them the option to have their trucks fixed in the off-hours instead of having to bring them in during the day and lose a day's work. The new service shift would also require an additional shift in the parts department, which would mean additional parts sales, as well as other changes. This kind of change—that is, a change in the composition of the business—is typical of market expansion at Level 4. The point, of course, is that very little remains the same in business, and if you want to maintain your success, you have to stay on the top of the market so you can take advantage of what the market gives you and defend yourself against competitors who try to take what you have earned.

It's also essential that you understand that things can move incredibly fast in the war zone and that, accordingly, you will have to develop new battle plans. Doing so will require you not only to continue researching and studying both the industry and the market as thoroughly as you did at Levels 1 and 2, but also to make sure you don't rely on misplaced assumptions based on what happened in the past. By the time you get to Level 4, you may not be as lean and hungry as you once were, but there are others out there who are just as lean and hungry as you used to be. And since you have a successful business, they will take runs at you, just as you took runs at successful businesses when you were starting out. If you want to maintain your success, then, you must point your big weapons at them so you can either kick their butts out of the market or inflict enough pain on them to make sure they leave you and your business alone.

The Benefits of Understanding the Marketplace War Zone at Level 4

• Understanding the marketplace war zone enables you to recognize the pitfalls of success and counteract them.
  
• Understanding the marketplace war zone enables you to review your business in light of mistakes that have been made and develop plans to avoid such mistakes in the future.
  
• Understanding the marketplace war zone allows you to define new success points based on your experience and knowledge of the market and to take your company there.
  
• Understanding the marketplace war zone makes it possible for you to overcome the apathy of the success comfort zone by developing new strategies and adding new, high-energy managers to your team.
  
• Understanding the marketplace war zone enables you to redefine opportunities that were unachievable or unthinkable at the survival end of the spectrum and take advantage of them with your new strength.
  
• Understanding the marketplace war zone helps you protect your company from beating itself out of its past gains.
  
• Understanding the marketplace war zone gives you the opportunity to begin considering what will happen when your new success objectives have been accomplished and what your next market move will be, and begin planning for it.
  

By the time you achieve this level, your product or service—as well as your business—will have been fairly well established. You also will have a good understanding of what customers want in terms of their tolerance for pricing, likes and dislikes, and expectations. Now, taking advantage of this understanding, you have to either enhance those products or services that are already widely accepted or develop new ways to create revenue and gross profit using those products or services as a weapon.

One way to enhance an already existing product or service is to look for natural add-on items that are likely to interest your customers. Amazon and iTunes do this particularly well by recommending books or songs other people who purchased what you're looking at have bought and, of course, making it easy to purchase the additional items. In fact, iTunes takes this a step further by also listing the most popular songs by the artist whose song you are considering buying. Similarly, Pandora Internet Radio asks you to rate a song by giving it thumbs up or down, and when you have, opens a window that lets you connect directly to iTunes so you can buy it. This provides sales and gross profits for both companies, a win–win all around.