Things are good – your business offers a range of in demand products & services, has an established & returning customer base, and is generating a steady stream of revenue that delivers a solid profit.
All good businesses reach this fork in the road. There are two paths:
- Maintain the status quo, enjoy the fruits of all your hard work, and become settled and content.
- Celebrate your current success and utilize it to drive your business to become more efficient and profitable.
Markets have never been more competitive nor changing as rapidly. The minute you walk down path #1 is the moment that your business becomes exposed to unforeseen changes in your market and your competitors taking your market share.
Driving change in an environment where you’re not profitable and at risk of going under is a hard, unforgiving, and soul destroying exercise. You don’t want to become the next Blockbuster, Hummer or Kodak:
- In the 1990s Blockbuster video was the market leader for video rentals. Viacom purchased it for $8.4b. Blockbuster’s earnings were largely generated on late fees – which customers hated. This prompted the creation of Netflix. By 2010 Blockbuster had a market cap of just $24m. Netflix now has a market cap of $48.5b.
- Having a hummer was once a status symbol. In 2006 54,000 hummers were sold. Then climate change and environmental sustainability became a world focus and the price of petrol increased significantly. In 2010 sales dropped below 2500 per year and the brand was discontinued.
- In 1999 Kodak shares were worth $80+. By 2013 Kodak was bankrupt. Instant photography was developed in 1948. Kodak didn’t react until the 1970s, copied Polaroid’s product, got sued for $1b, and lost market share to Fuji.
These highly profitable businesses had years to change, but changed too late.
It may seem counterintuitive but now – whilst your business is successful – is the perfect time to drive change. Change now, before you’re forced to.
But how do you create momentum for change when there’s no “burning platform”?
Here are our 4 tips for creating momentum for change in a profitable, successful business.
- What are customers telling you?
Who are your customers and what are they saying about your products/services?
Seek continuous feedback from your current customers. Do the same for the customers of your competitors. Why have they chosen to work with your competitors instead of you? Analyse negative trends and make a commitment to resolve them.
- What is the industry environment telling you?
Are you/your customers industries facing an increased focus on safety, environmental sustainability, increased government regulation, decreased government assistance, and/or reduced product sale prices? How do these trends impact you and your customers businesses? Define what do you need to change to adapt effectively.
- What are your competitors doing better than you?
How have your competitors performed in the last 12 months? Who’s taking market share? Who’s losing market share & why?
Find the competitors who have the market share that you want to take, or the competitors that could take the market share you currently hold. Define what they do better than you that gives them a competitive advantage. Use this to drive improvement on these areas in your business.
- Set stretch performance targets & build an improvement program
Use the information collected from the points ↑above↑ to set stretch targets for your business performance. This ensures no one is comfortable with the current level of performance and everyone is focussed on continuous improvement.
Build and resource an improvement program to address key issues from your customer, market and competitor analysis.
By adopting this approach you will ensure your business is responsive to your customers, changes in your industry, and challenges from your competitors. Your business will change proactively and remain profitable not only now, but for the long term.
About 3 Ps in Profit
Our Vision: Enabling more Australian small & medium businesses to succeed & thrive through genuine partnerships that deliver performance improvement & growth.
Our Mission: Improving & growing Australian small & medium businesses by focusing on the three fundamental elements that drive performance; planning & alignment, processes & systems, and people.
Want to find our more? We would welcome the opportunity to discuss your performance improvement objectives and how we can help you achieve them.