Selling your product in Wal-Mart or on overstock.com may be the right strategy for you—if your product is cheap and made in China. There are similar ways to sell out when you provide services as well, but chances are, the vision that you aspire to is one of significant profits and a company of distinction—either is difficult to achieve when you’re competing on price.
So what’s the secret sauce to competitive advantage and harboring profits? There’s no silver bullet, but in a series of blog posts we’re going to cover a few crucial items.
Better Performance—Better Profits
In our work as financial consultants, we see many companies. Some struggling and others thriving, one of the most consistent trends we see is that those companies that are consistently more profitable have a culture of high performance. Some companies were started around a truly novel idea that customers love and can get away with lack-luster performance, but that is more the exception than the rule. So what are the star performers focused on?
- They know their customer well and create an environment of accountability. The worst performers are those that keep their customers in the dark—making it difficult to get their questions answered and that make returns and refunds next to impossible. Set straightforward policies and publish them. Let your customers know that they can hold you accountable if the service and product they receive isn’t what you promise or imply. This culture will keep not only the company honest, but your employees as well.
- They know their finances. The best performers have financial information with which to make decisions at their fingertips because they have put the time, attention, and money there to have it. They know that when they sell X product or Y service, they make money, and that when they sell Z product or service they make even more money. Priorities are clearer and clear goals are set.
- Finally, the best performers are cognizant of the fact that employees are driven to perform and succeed naturally—but may or may not have the training necessary. Good companies hire people who have the training already. The best companies both hire people with talent and training and then continue to provide opportunities for those employees to get additional training where necessary.
We’ve covered tips more centered on culture in this post. Remember that building and being a unique company is more the exception than the rule, as it requires effort and investment. But as it is the exception, the best profits are reserved for these companies. Consider adding to your team to bring in the expertise necessary.