Bruce Swabb, CPA
How do you make business decisions these days? Most of us work in the “AGFZ” or the anecdotal gut feeling zone. Truth is, we operate pretty well in the AGFZ. The bank account is in good shape and business is consistent, even if it’s not growing as fast as we think it could.
But what if we decide to get strategic? Clearly governments and even big business understands the need to gather key information so that they can make critical decisions to solve the most important issues they face. I think it is extremely important for you to have the same level of critical data for your business. No small business can stand to waste capital by spending it in an unproductive way.
A Challenge: Define four key data points that will give you the competitive information you need to make strategic and tactical decisions.
Who are your competitors? Study your local and national competition. Honestly assess the things they do better than you do, and likewise, note where you have a better process or product. Can you pinpoint where and how they market to your shared customer base?
Find companies in other industries that impress you and see if there are ways to duplicate their best practices. Take a look at Chik-fil-A. They have taken the fastfood model and improved it so much they can afford to close on Sundays!
Competitive Pricing – It is obviously a no-no to collude with your competitors when setting pricing. But it is essential to know exactly where your prices are within your competitive market. A marina client of ours is expert at this. He always knows what the marinas in the region are charging for slip rates and fuel and stays just under the two highest in price. It sounds simple, and it is. You are not looking for a price war, so be careful not to get caught in a downward spiral of competitive pricing.
Regularly Ask Your Customers – I love Survey Monkey. What a powerful tool! It is easy to set up and it will make your customers feel more connected to you and your company. Ask your customers about your products and service. Ask them for improvement ideas. Give them a way to respond and interact with you. You will be amazed at the instant goodwill you can create by being accessible. You will gain some very useful information.
Who the heck are your customers? – The goal here is to describe your ideal customer. Where do they live? What is the range of their disposable income? How do they make the decision to buy your product? Where does your ideal customer spend their leisure time?
Are Your Vendors Good to You? – It kind of hurts when you ‘ve been loyal to a vendor for the past ten years and you discover that you’re paying significantly more than newer competitors. Stay loyal, but regularly test the waters by getting competitive quotes from other vendor options. Then give your favorite guy the opportunity to keep you as a customer.
Enlist Your Employees – Get your team involved in the intelligence gathering and delegate the tracking of the information. Create a set of competitive benchmarks and how your business stacks up in the comparison. My wife teaches high school and she uses some really fun new software apps to gather, test and interact with her students. The kids eat it up and love to earn points and track progress. Smart business owners can use these tools as well, especially for process improvements and training. Make them earn that secret decoder ring!
How Will You Use This Data? Once you get into the habit of gathering data that matters to your business, you will be in a much better position than you were when you operated in the anecdotal gut feeling zone.
Your long term strategic goals (“the what”) will almost draft themselves, as the data makes your path and your longer term goals clearer.
Putting plans in place to achieve “the how” or the immediate discrete steps toward achieving some strategic goal is known as tactical planning. By learning more about the best practices of other companies, and by engaging your employees, you’ll be able to better define and implement your tactical plans.
If it helps you bust out of the AGFZ, envision yourself as Sean Connery or Daniel Craig. You will take your decision making to the next level rather than the random way we make decisions today. And you will look damn good while doing it.