Insights on Strategy

Business Makeovers

A Monthly Newsletter published by Strategy Development Group, Inc.                   October, 2003

Growing Your Business in Difficult Times

Growth seemed a lot easier in the 90’s. With few exceptions markets were expanding in all sectors of the economy. Optimism was in the air. Most business owners were more concerned about managing growth than sustaining it.

We live in a different world today. Business growth now must come at the expense of others. Today’s concerns tend to be more focused on sustaining market share and a competitive advantage; and for many, growth has become their biggest challenge. What worked in the 90’s is becoming less effective in today’s markets where competitors continue to raise the bar in a race for faster, cheaper and better products. In response to that challenge, here’s what some companies are doing now.

Do More

To stem falling sales, and in lieu of a well thought out strategy, many companies decided to simply try to DO MORE of the same. They added more products and features, expanded their customer base and tried other markets. Soon, each part of their business began receiving less attention. There was a constant outcry for more resources as new skill sets and infrastructures were added to the mix. The end result was an undercapitalized, more complex and inefficient organization. Additional sales were gained at the expense of lower profit margins. Oftentimes, under-attended core businesses began losing their momentum and competitiveness.

Do Less

Their CPA’s and consultants soon noticed that everything was growing (receivables, inventories, and operating expenses) except profit margins and sounded the alarm. “You have to DO LESS. Go back to your core business and do what you know best.” On their advice, these same companies began dropping all of the peripheral product lines and challenging customers acquired during the DO MORE period and began focusing on what made them successful in the first place.

They soon returned to profitability, but sales continued to slide and costs could only be cut so far before profits again began to diminish. It seemed that what had been a competitive advantage in the past had become the industry norm. Everybody was trying harder and at the same time complaining about lower prices, shorter delivery times, and quality requirements.

Do Something Different

Instead of participating in this hopeless race to industry commoditization, we suggest finding a new business strategy, a new way of competing in your market. Try DOING SOMETHING DIFFERENT; that is, finding a better way of competing, a better way of providing value to your customer. Begin by looking for other opportunities to create customer value that will benefit from changing market realities or holes in the competitive landscape. Here are some places to start looking:

Are there emerging markets or market niches that you can be responsive to? Are there special services, technologies, or skills in your industry that will be in greater demand in the future? Are there ways of becoming the lowest cost producer/provider that haven’t been considered? Are there patents or resources that might become important in the future? Are there labels or brands that can be developed in certain niches? Are there different ways of selling you noticed in other industries that might work in yours? Are there new channels that might be opening up for your products or services?

Going in a new direction means giving up something you are currently doing; otherwise you are just adding on and diluting your resources. However, shifting resources away from the familiar is not an easy thing to do unless you have the confidence that you are making the right choice.

Luckily, the Chart Your Own Course® methodology provides a proven structure for strategic decision making; looking at all of the options and then choosing powerfully and with confidence. This methodology is available to small-business owners in a peer group setting through our CYOC® workshops and to larger organizations through our planning team facilitations. For more information on using this innovative methodology to jump-start your growth planning, email paul@strategydevelopmentgroup.com or call Paul Ratoff at (714) 572-3131.