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More advice from Sheffield’s finest Business Adviser Tano Rebora

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Icon Business Solutions is a Global organisation that is focused on working with Owner / Managers of SMEs to help them become more profitable, reduce their time commitment and achieve their business and life plans. Tano Rebora is a partner of Icon Business Solutions and an experienced Business Adviser, as well as the Seven Creative blog’s guest business writer.

Tano Rebora, Icon Business Solutions Ltd.

Today, Tano asks: Is your competition hurting your profits?

I am referring to Vodafone making a successful bid for the Cable and Wireless business.

Well, I guess that those within the sector long term or keen watchers may have had an inkling, but most business people, across the board, that I have discussed this with did not see it coming.

Is this a potential future threat to the almighty BT?

Fascinating – not from the present positioning or financial viewpoint but because it reflects the highly competitive nature of the telecoms industry; the continual repositioning of the major ‘brands’ as different carriers of different services. But who defines the new world order; the brand or the consumer? This does not just refer to the telecoms sector, of course, the question applies to all

Yet the Vodafone strategic vision is very clear: ‘delivering a more valuable Vodafone’ through five clear directions amongst which – ‘total communications: continue to develop the adoption of converged fixed and mobile services’. We should have known, really.

There we are; a clear strategy, clear direction and clear competitive positioning which has taken it out of a very clear niche that other mobile suppliers are competing in.

Whilst ‘the pack’ is racing around to be ‘the best’, Vodafone has moved the goalposts. Joan Magretta of the Harvard Business School defines Michael Porter’s view of Competitive Strategy as ‘why being unique is better than being best’.

So what makes companies across the spectrum – ‘unique’?

There are a number of factors but, principally amongst these:

  • Clear strategic vision:

Many owners/ shareholders believe in having organisations that are ‘agile’ and ‘flexible’. Of course, they are completely correct. Who wants an organisation that already has a ‘due by date’ from the beginning? Organisations must evolve in order to achieve. But note the use of the word, evolve.

It is the duty of any executive team, from the start-up to the corporate, to establish a vision of what their company is to achieve in the longer term, not simply the next six months. With that comes a clarity of product/ service to be provided, to what market and in what timescale. Planning for all other functions follow that.

Experience dictates that most yearly plans revolve around the ‘last year plus x%’  and that most business owners, at varying levels of company turnaround, have not had the opportunity to focus on where they want or need to be. Far less are the Owner/ managers who actually see the development of their company reflecting their own personal and business needs

Stephen Covey, in his ‘7 habits of Effective Managers’ advocates starting with the end in mind but – how does business generally measure up. In the eyes of this author – poorly.

If this is the case then competitors will always lead.

  • Clear target market:

Many Owners start their companies with clear ideas of where they intend to be personally at some future point. Of course, as the inevitable pressures start the line between what the intended market is and who seems to be interested in the products/ services the lines become blurred.

It does happen that may some start with a perception of the market they intend to serve only to find that the perceived market does not exist, is already serviced by potentially competing products or barriers to entry are higher than first thought.

It is easy to deviate from the plan at that point, maybe it’s time to go back to the drawing board and to refocus. Does this just happen to ‘newbies’?. Many companies find that the mismatch within the first to second year of operation, some struggle with this for eternity, it seems.

The questions to ask are basic: What is our product? What market does it serve?

The most successful companies answer this in two ways:

  • Complete and total focus: find the real niche and serve that to the exclusion of all else. If the market does not seem big enough to serve the needs then expand geographically.
  • Reorganise into different divisions: serve differing markets with the same or slightly differing products under the same ‘umbrella’ or brand thus being able to measure the effectiveness of the sales/ marketing effort and maximising synergies.

In most cases, it seems clear that few ask: Who is our Client? In B2B scenarios: is it the M.D., the HR Director, etc. etc ? Appropriate messaging should ensue as should appropriate direction of the sales effort and product bundling.

  •  Differentiated product/ service:

Although most business owners may believe otherwise, there are relatively few Steve Jobs, Bill Gates, Sir James Dyson or, at a different level, Sir Alan Sugar or Richard Branson.

The fact is that, for most companies, someone somewhere has a product that is similar. If not, there soon will be; the cult of the ‘me too’ has been alive and kicking for many centuries.

But how to differentiate?

Many business owners/ salespeople claim to ‘experience in the industry’, ‘best product’, ‘geographic availability’, ‘best client service’, ‘24/7 cover’, add your own here. The list is endless. Yet sadly, so often in this quagmire of similarity it all boils down, at least in the buyers mind, to – how much does it cost?

Of course, it is very easy to make these statements from afar and not see the ‘day to day’ battlefield that we all operate in.

Frequently, as company leaders struggle to work ‘on rather than in’ (Michael Gerber – The e-Myth) the race seems to be centred on ‘price’ as the ‘holy grail’ of client acquisition policy. But so many factors contribute which are, somehow, left behind in thinking and practice.

Why is your company unique? How is it demonstrably different? Ask the question repeatedly because if there isn’t an easy answer then how is the prospective client to know? More importantly, how will they justify the price to themselves?

Dramatically, the euphoria of the acquisition of a new client is quickly superseded by the misery, on reflection, of a diminished profit margin. Yet how many Company owners really know how much they are able to discount without bleeding funds to a very nasty conclusion?

Competition is, and will always be, alive and kicking. Encourage competition; make competitors your ‘allies’. After all the more activity in a marketplace the more opportunity there is. Just make sure that the product and the service the Clients want is yours. Why: because you knew what they wanted and you are strategically building a company that provides this in a more demonstrably different way to everyone else.

Good Luck.

Tano Rebora, Icon Business Solutions Ltd.

Written by Chris

August 21st, 2012 at 2:48 pm

Advice from Sheffield Business Adviser Tano Rebora

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As a good friend of the Seven Creative team, it’s only appropriate that we share some of Tano Rebora’s business wisdom. Tano is a partner of Icon Business Solutions and an experienced Business Adviser specialising in turnaround and growth. We are lucky enough to be able to share this great article, written by the man himself.

Tano asks, ‘How many clients are too many?’

In the eternal quest for bigger revenues the hunt for new clients continues without stop. Yet many companies have little idea if client acquisition is appropriate either in terms of quality or quantity.

Recently I met an M.D. of a company that was started three years ago. After steady growth they currently have so much demand for their product that production is unable to keep up with demand and the number of ‘reworks’ has started climbing. The fact is that any abnormal growth in any one area of the business will have impact on others. So, similarly, for example,  their employee satisfaction is now lower than it has been.

Two points come to mind;

1. Growth is a planned activity, it does not just happen. It may be under or over estimated and the plan has to be flexible enough to cater for both eventualities. In either case the ultimate price may be paid for in cashflow terms.

2. Are all clients good clients? What company are you trying to build: a company that is focused on pure commodity or one is that is focused on quality? In the first instance be prepared to compromise on price in the second be prepared to qualify who is going to be your next client.

In the case of the organisation introduced earlier, analysis showed that the clients were clearly divided into three business areas. Whilst two of these areas are highly profitable and attracting clients that require a quality, personal product the third is more focused on price and less on ultimate quality. As is the norm, this last area is more ‘stock ‘em high, sell ‘em low’. A problem? Only if the amount of resources associated with this area overshadows that associated with the higher margin business. Yet, there is space for both types of business. In this case it really was a question of having too many clients and of the wrong ‘type’.

Following a thorough analysis and strategic business plan development the company has now re-organised to develop the higher margin business and has clearly set objectives to be the market leader in that sector. Coincidentally, the M.D. has now developed a strategic alliance with his biggest competitor in the ‘other’ area. Having agreed that their focus is different they are now happy to refer business to each other.

How many companies know what their niche market is? How many know what their competition is? How many know when the point comes that they may be facing too many clients? How many companies have the necessary internal processes defined that will enable them to provide the necessary information needed to answer the previous questions?

Analyse the client base on the basis of profit margin. Are they all individually appropriate for your business? If not, is it your competitors that have led you away from your sweet spot?

 Tano Rebora, Icon Business Solutions Ltd.

Written by Chris

June 25th, 2012 at 12:44 pm