Every business owner has the dream of being successful when they launches his or her own company. Once you get out there, it usually becomes apparent that you’re not alone. To reach any level of success, you’ve got to be competitive with other similar businesses in your market.
When strategic planning, one important question to regularly ask is: Just how competitive are we anyway? Objectively making this determination entails various key factors that affect profitability, including:
Industry environment. Determine whether there are any threats facing your industry that could affect your business’s ability to operate. This could be anything from extreme weather, to a product or service that customers might use less should the economy be negatively impacted or buying trends significantly change.
Tangible and intangible resources. Competitiveness can hinge on the resources to which a business has access and how it deploys them to earn a profit. What types of tangible and intangible resources does your business have at its disposal? Are you in danger of being cut off or limited from any of them?
For example, do you own state-of-the-art technology that allows you to produce superior products or offer premium services more quickly and cheaply than competitors? Assess how suddenly this technology could become outdated, or whether it already has.
Strength of leadership team. As the owner of the business, you may naturally and rightly assume that its management is in good shape. Try to be open to an objective examination of its strengths and weaknesses and get feedback from others.
For instance, maybe you’ve had some contentious interactions with employees as of late. Ask your managers whether underlying tensions exist and, if so, how you might improve morale going forward. There’s probably no greater danger to competitiveness than an uncomfortable workforce.
Relationships with suppliers, customers and regulators. For most businesses to function competitively, they must rely on suppliers and build strong relationships with customers. In addition, if your company is subject to regulatory oversight, it has to cooperate with local, state and federal officials.
Discuss with your management team the steps the business is currently taking to measure and manage the state of its relationships with each of these groups. Have you been paying suppliers on time? Are you getting positive customer feedback? Are you in compliance with applicable laws and regulations and are there any new ones to worry about?
Loss of competitiveness can often sneak up on companies. One minute you’re operating in the same stable market you’ve been in for years, and the next minute a disruptor comes along and upends everything. Contact us for more information and other profit-building ideas.
About the author
Joe is a 2004 graduate of Mount Saint Mary’s University, with a bachelor’s degree in accounting. He is also a 2000 graduate of Archmere Academy in Claymont, Delaware. Joe started with the firm in 2002 as a part-time intern, joining full-time in 2004.
Since then, he has worked with a myriad of clients, including entrepreneurial firms, agricultural businesses and nonprofit entities, including those with OMB A-133 audits. Joe, along with the firm, contributes to Toys for Tots, Goodwill Industries, as well as several other community organizations. He is a member of the American Institute of Certified Public Accountants and the Delaware Society of Certified Public Accountants.