Businesses all across the world are mired in the current global economic crisis. As our lives are more impacted by global events, and the fact that business can now be driven over the internet, it is important to strive for every advantage you can gain for your business. Despite long-term policy and legislation that may protect businesses located in certain regions, it is more important than ever to be competitive, keep your business slim and tight, and make the most out of your profits.
What You Need to be Competitive
There are several singular ways to gain a competitive businesses edge, and these methods are talked about in the news today. Outsourcing and leveraging technology are just two high level ways to ultimately increase your profitability.
But increased profitability can only be gained by understanding the core values behind every business model and finding synergy between several solutions, or even by having a vision for your company that is a hybrid of several profitability increasing solutions.
• Increasing Sales Volume: While it seems like an easy chore, increasing sales volume can be one of the toughest business goals. Increasing sales volume opens you up to exploding costs and credit burdens, and those must be controlled. If controlled, increased sales volume can help you cut prices for consumers and may be a win for you.
• Reducing Costs: You first must understand what your costs are in relationship to other aspects of your business before you can make any real headway in reducing them. Cost reductions cannot simply be made out of hand just to look better on paper. The ramifications to cutting costs need to be studied before decisions are made. You can gain a competitive advantage here by making sure all costs are fully recovered.
• Improving Product Mix: The diverse relationship between volumes of product lines and services you sell depends a good deal on how your company has developed historically and is less dependent on any plans that were made to diversify your product line. It’s quite possible that your Product Mix is not as great as you think it is, and so it might warrant a good looking at. You may need to sell more or less of one product while also supplying more or less of certain products.
• Increasing Prices: Increasing prices is simple to understand but can have complex and lasting effects on your business. You must know a lot about how your products compare to your competitors as well as the state of your specific marketplace to determine whether or not a price increase is warranted and would be beneficial to your overall profitability.
• Reducing cost of operation: Along with increasing prices, there is another seemingly simple step in increasing your competitiveness and profitability. Reducing cost of operation. Why not just take out a red pen and start slashing things like employee training, wages and bonuses? Why not cut a corner producing a product that seems like a customer favorite? The answer is simple. Before you reduce costs by cutting anything, you should be aware of the effect it will have on your company. There is employee morale to consider, or losing customers because your product no longer has that special perk for the customer.
How to Advance Your Competitive Edge
Everything in the above examples can be accomplished by starting out with the best possible knowledge of your business that you can acquire. If you are out of touch with the various aspects of your business, then you will inherently have a problem gaining a competitive edge.
• Determine the holes in your company’s plan, based on the profitability factors above. Work to eliminate those gaps.
• With the knowledge you gain above, find ways to streamline your project planning such as having one project manager to find ways to fill the gaps at once rather than several separate teams working on potentially interlinked problems.
• Explore technologies that will allow your customers direct contact to your services and products. Use technology to streamline order processing and purchases. This will not only reduce headcount at your company, but increase your customer’s satisfaction.
• Improve your human resources by exploring outsourcing and combinations of outsourcing techniques that may not be considered traditional. Leveraging your overhead while rewarding your best employees is the best way to get the lowest cost and improve your competitiveness.
In this difficult marketplace, it is important for business owners to take the steps needed to increase their competitiveness. Only by following some of these steps can they achieve the best profit versus costs and truly become competitive.
About the Author
John Tanner is a marketing consultant and founder of VAR
Strategy.
After a career in military intelligence John helped grow businesses in various
industries through sales and marketing, eventually finding a passion for
challenges and opportunities for business development in the IT channels.
VAR Strategy is a product of this passion and was created to provide
helpful information and resources to assist VAR's in growing their businesses.
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