Refurbish Your Business Model to Gain More Profit and Market Share
Large companies are always selling off operations on which they don’t make enough money. It’s not unusual for the new buyer to quickly increase the profits, cash flow, and market share.
Why is this possible? It’s simple to understand this success: Improve the business model to eliminate the weaknesses that harmed business results under the old ownership.
Let’s look at an example to see what’s possible.
American Woodmark had been a high volume manufacturer of kitchen cabinets when it realized that its profitability would be much higher if volume could be further increased. More effective plant utilization would make this profitability benefit possible.
With the rapid geographical expansions of Home Depot and Builder’s Square stores, American Woodmark realized that it could become the first cabinetmaker to offer one week delivery for builders, remodelers, and do-it-yourselfers. When time was of the essence to the building supply store customer, American Woodmark would have a cutting edge advantage.
In 1980, the company set up a new production schedule and set of distribution centers to make this one-week performance possible. Selling through Home Depot and Builder’s Square meant that distributor mark-ups could be much lower than through existing channels. When price was of the essence to the building supply store, American Woodmark would have an important advantage.
As a result, anyone could get quality kitchen cabinets faster at lower prices for the first time. When both advantages were issues, American Woodmark could expect a double-edged advantage.
The new distribution channel provided a further edge. Homeowners, builders, and architects could also conveniently see the cabinets by visiting a local store in order to pick out the ones they liked best. Seeing the actual cabinets and being able to hold up samples of countertops and flooring to the cabinet finishes allowed savvy homeowners to get a more pleasing installed result.
Volume soared as these cutting edge advantages removed competition from expensive cabinetmakers who took a long time to deliver. By 1985, the company (which had been an LBO of a Boise-Cascade operation) went public to raise the capital to finance its rapid expansion.
What are the lessons?
1. Look for what isn’t working very well.
2. Consider how trends could be used to improve that performance.
3. Identify and implement new business models that present outstanding ways to capture the benefit of the trends.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
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Donald Mitchell is chairman of Mitchell and Company, a strategy and financial consulting firm in Weston, MA. He is coauthor of seven books including Adventures of an Optimist, The 2,000 Percent Solution, and The Ultimate Competitive Advantage. You can find free tips for accomplishing 20 times more by registering at:
====> http://www.2000percentsolution.com .
Brett learns he can’t afford the luxury of undercharging!
Brett was in a quandary. He had been running his sales and
marketing consultancy for nearly three years – and while he
wouldn’t describe himself as successful, he had just about
managed to keep his head above water.
One of Brett’s issues however, was how to value his service
- for although he felt he was every bit as good as his
competitors, he mistakenly believed that clients bought
primarily on price.
This had led to Brett undercutting the competition – and
while initially this policy had won him a significant
number of new clients, it wasn’t long before he realised
that his modus operandi was costing him far more than he
realised.
Not only was it hard to increase prices once they have been
set, but Brett also found – much more worryingly – that the
kind of clients who bought on price alone were the kind of
clients who didn’t like paying at all.
Engaging Management Consultants – or how to avoid getting ripped off
Management consultancies have a reputation for ripping off
their clients. But is this always deserved? There are
many reasons for engaging management consultants. You may
need a particular technical skill, you may need an
objective, third party opinion, or you may have some short
term needs for expertise in change management. There are
also lots of instances when you shouldn’t use consultants:
you’re not sure what the problem is and you want them to
tell you; you have a budget you need to expend by a certain
date; you want them to make some people redundant. These
are not good reasons for engaging a consultancy and will
inevitably lead to disappointment. Taking a responsible
role when contracting with consultancies will ensure this
disappointment is avoided.
First Step: Decide whether you need a consultancy or not
To decide whether it’s appropriate to engage with a
consultancy or not, consider the following:
What is the need or problem you want to address and why do
you think this need or problem exists? Will it be solved by
this intervention or will the underlying issue still exist?
What skills are you looking for? What value might a
consultancy bring to your business? What risks are there to
your business in using an outsourced resource?
Choose an Always-Win Strategy Like Warren Buffett Does
Only a relative few have made significant, successful
adjustments to changing conditions from irresistible forces
(such as financial markets, weather, demographics, new
technology, and attitude shifts). There is perhaps no
more interesting an example than Berkshire Hathaway, which
started as an owner of a failing textile mill that
eventually did go out of business due to adverse conditions.
Since then, Warren Buffett, Berkshire’s founder, has
successfully navigated the changing tides of business and
financial markets over the years to built one of the most
successful companies ever. Unlike Microsoft, and Intel
which had relatively few important shifts in irresistible
forces, Berkshire Hathaway has weathered many by
redirecting its resources and energies into new, more
promising directions.
After having been primarily a portfolio manager of a
handful of common stocks for many years, the company has
recently shifted again to emphasize purchasing and
operating companies. You too can learn to catch the full
benefit of today’s volatile and rapidly changing forces and
spur your enterprise on to greater and more rapid growth
than ever before.
Unified Messaging – Critical In Today’s Technical Age
Unified Messaging, abbreviated as UM, is nothing but the integration of different communication modes used by us – such as the email, voice mail, and fax – into a combined communication experience, such as a mail in-box and/or alert service, which then can be accessed from a variety of devices such as the PC, fixed network phone, or mobile phone.
The advantage with unified messaging is that with this
technique, you have more control over the communication
methods you may be using, since now you can make use of a
single source for message delivery, repository,
notification, and access, thus cutting down the time factor
involved in the whole process.
UM is especially useful for companies that want to be in
touch all the time, and do not want to waste any time with
sending/receiving/accessing info.
Now, let’s see the different UM capabilities in detail. The
UM capabilities are single delivery, single repository,
single access, and single notification.
Shun the Status Quo to See the Possibilities to Accomplish 20 Times as Much
Organizations usually underestimate the potential value of
the most important new information, technology, and ways of
operating. This error occurs because the new information or
resource unexpectedly makes untrue what has been undeniably
true in the past.
Achieving 2,000 percent solutions is a good example of this
tendency. While hundreds of organizations routinely
develop and implement such solutions every day, the
majority of businesses, nonprofit organizations, and
governments continue to focus on how to make 4, 5, or 6
percent improvements. With the same time, effort, and
resources, these people could be accomplishing hundreds of
times more!
What is a 2,000 percent solution? It’s any way of
accomplishing 20 times more with the same time, effort, and
resources. Why would you shoot for less?
Stop Waiting for Someone to Produce You
I can remember when I would wait for opportunities to come
to me. I would stand by the idea that “whatever is supposed
to happen will happen” and then one day it occurred to me
that all I was really doing was hiding. What was behind
that hiding was, “Who do I think I am to be amazing and
fabulous, AND wealthy?” I wasn’t coded for success. I was
coded for approval.
Since I’ve been coaching other entrepreneurs on building
their own successful, sustainable businesses, I’ve seen
this same syndrome dozens if not hundreds of times.
Sometimes it’s a question of, “Will I really be able to
handle the success?” or “If I am so abundant and
successful, then I’m taking away from others.” Of course,
neither of these is true. First, you are always set up to
put systems in place that will embrace your growth rather
than stunt it and second, the more successful you are, then
the more success there is for others. There is nothing
spiritual, kind, or gracious about holding yourself back
because when you do, you are actually holding others back
as well. When you hold back your gifts, you rob the world.
Your gifts are not for you alone. When you truly use your
talents to serve others, then you are truly living your
purpose and when you profit from this-even better; you have
more to give and the success cycle fuels itself. See?
Now that we have that straight, let’s go to the deeper form
of sabotage I’ve seen in others and myself: waiting for
someone else to do it for you. That same question of, “Who
do I think I am?” can be pretty sly and sneaky by fooling
us into believing we aren’t capable, which shows itself as,
“I don’t know enough,” or “If I do this and succeed, then
people will see that I’m actually capable and no one will
take care of me. I’ll always have to do everything by
myself.” Yikes. This is also cutting off your purpose and,
I can pretty much bet on it, stunting your profit.
Offering A Guarantee Without Losing Your Shirt
You may be offering a guarantee, but nervously, or perhaps
not offering one at all. What if a bunch of your clients
ask for their money back?
Sluuurrrrrpppp… there goes your business, down the drain.
What makes a guarantee safe for you?
It helps to understand that very few people ever call in a
guarantee. Why don’t they?
The first and best reason is that you are putting your
heart and soul into doing the best you can possibly do for
your customers.
And your client is actually rooting for you– they want
your offer to work. They want to believe in you.
This means that your customers are cheerleading your
efforts. They paid money, they’ve committed themselves, so
they’re actually on your team.
They also don’t want to have to face having made a wrong
decision. Something has to go pretty badly before they’ll
call in a guarantee.
Put those reasons together, the whole-hearted efforts on
your part coupled with how much your customers are rooting
for you, and you can see why guarantees hardly ever get
called in.
You’re still a little nervous, aren’t you?
Developing a Value Philosophy
As you may have guessed, providing great benefit to
customers doesn’t occur by accident. It comes directly from
applying a well-designed value philosophy. What does it
take to create outstanding products and services that are
not only profitable, but also capable of converting
ordinary consumers into “raving fans”?
This article covers four critical ingredients that produce
stellar products, services, and customer relationships. You
can boost your product and service value to a level that
truly “wows” customers by doing the following things:
1. Researching your audience’s needs.
Creating impeccable results begins with the approach you
take toward researching what your customers or prospects
want and need. Developing successful offerings then
involves incorporating what you learn into solutions they
want to buy. Where and how you derive your product and
service design requirements can hugely influence the
success of your offerings, and extends beyond product
design into the entire customer experience.
Ways to research what matters to your audience’s success
include the use of interviews and needs assessments, mining
the information in your customer database, and probing
customer headaches via support calls and surveys.
7 ways to earn more and work less every day
They say every cloud has a silver lining. But when I recently spent a whole day desperately giving the kiss of life to a relatively new computer, it was hard to see the bright side.
Yet, when the machine finally started working again, I made
a fantastic discovery.
That little icon at the bottom of my screen that flashed as
each new email arrived was no longer there. And, not only
did I survive the day quite happily, I realized I was much
more productive.
It helped me recognize the importance of taking control of
my time. As business owners, time is arguably our most
precious resource. We can choose to sell it, invest it or
waste it. So the more effectively we use it, the greater
our chances of success.
Here are my 7 tips for mastering time.
1. Know how much your time is worth – The first step in
getting control over your time is knowing its real value.
The most obvious way to value your time is just to divide
your annual earnings figure by the number of hours you work
in a year.
But our number of productive hours is much lower than the
actual hours we work. So to get a better picture of the
real value of your time, estimate your number of productive
hours – for most people it’s less than three a day.
Once you know your hourly value, you should ask yourself if
what you are doing is worth your hourly rate. Outsourcing
activities is now so easy that you can often pay someone
else significantly less to carry out tasks.
2. Clone yourself (or your work) – While it’s not yet
possible to clone yourself, you can easily clone your own
work without any ethical issues. When you’ve written
something, leverage it for maximum benefit. With a little
additional work, a presentation script easily becomes a
magazine article or a sales letter, for example.
3. Spend more time on output than input – Are you spending
too much of your time reading emails and learning new
things? When you’re inputting information, you’re not
outputting. And it’s only output (like working for clients
and developing products) that makes money. New knowledge
and different ideas are valuable but sometimes us info
junkies need to go on an info diet!
