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Elevate your business

Market dynamics create opportunities

By Stan Rydzynski

The last four years have been interesting for any business executive and owner. The positive force of the ’90s and the beginning of the 2000s disappeared in a malaise that no one has ever experienced. The economy was rolling along with only short-term stops that made success easier to achieve even though we may have not understood what our companies needed to do to succeed when a larger verboten obstacle to success would appear. Let’s face it, all businesses were flawed! The most critical elements that required attention and excellence in executing were not managed correctly. Our thought process was not educated to understand the key activities that a company needs to concentrate on.

A long time ago, I attended a five-day seminar that attracted owners, presidents, COOs, CEOs and senior executive management only. It was the ultimate course on managing a business to succeed. In the beginning, the instructor outlined an interesting critical series of U.S. economic events over the last 100-plus years. Over this time, there was an economic downturn every 5 to 7 years. He stated that this was due to the mismanagement by business in the act of generating correct business practices. One of the biggest issues was inflation. Raising prices to achieve financial reward without providing a value to a customer is a flaw in business acumen. In general, that is why the Federal Reserve is overly concerned with inflation and manipulates interest rates to curb the velocity of prices. Downturns flush out businesses that do not practice correct activities in selling goods or services at a profit.

The Need for Excellence
While this is only one reason highlighted in the seminar, it became clear that businesses need to achieve excellence in specific business practices for long-term success. If you are not mastering all parts of the formula to earn a profit, then you are playing in a casino environment where your business has the odds stacked against you.

Nine Steps to Capturing Sales
The seminar was constructed to outline the basic framework that must be followed if a company wants to create a profitability record through any and all times. In addition, my experience with many clients has shown that many companies are not working on or have correctly initiated a strategic plan for long-term profits.
OK, what are the key elements? The practices and requirements that follow are meant for manufacturers and distributors:

1) New Products or Services – There are companies that are not introducing, or passionate about, new products. Many are too reliant on existing profits from their core products. Profits erode over time from competitive forces, inflation and the general cost of doing business (rising salaries and input costs). A company that does not introduce new products at a rate that will double current profits in 5 to 10 years, is heading for disaster. Ditto for services that a distributor relies on to differentiate themselves from their competition. Every time I ask a distributor about the quality of their service I always receive the same answer, “good or very good.” But no one says they have the best in their trading area. Or, they are always improving their service to achieve a level they believe customers want, saying it “saves them money/time to buy” (but who is “them?” Do customers see the need for the savings?). And it’s a rarity that they can prove that their customers say they have good service.

2) People – If you examine the elements of a great company, the top two from every CEO are products/services and the people that make them happen. But we have observed that companies are not developing or hiring the right people. Hiring someone with an MBA or PhD doesn’t mean they have the skills to perform. They are smart and have a lot of book learning but they generally lack the understanding of how the real world works, and their soft skills usually need improvement. They frequently believe a formula or case study they learned in school will lead to success. The key is employees who have the right seasoning (experience in your industry, developed or hired), driven by self-motivation to achieve success. Upper management must also understand that delegating power and authority is the road to profits. Micro-managing truly doesn’t work. Empowering key managers who are experts in their assignments and building a culture of teamwork will always win the race.

3) Driven to perform for the long term – The companies that are concerned with short-term profits will never overcome the valleys of the outside forces of the economy.

4) Know the needs of your customer – Business decisions are often made in the interest of short-term profit concerns (or opportunities) rather than on what meets the needs of the customer. Researching the needs of the customer is critical but is poorly or never undertaken by most. I have observed management making important decisions concerning new products/services or programs without the input of the customer (channel partner or end-user). In many cases, upper management ignores, doesn’t request or doesn’t consider the research when making a decision. They make decisions based on their past history, or a conservative approach.

If you can determine the needs of the end-user for the benefits/applications they require, your chances to make a sale increase dramatically. Also, it creates a big headache for your competition when the end-user demands your product or service.

5) Reasons for a customer or end-user to purchase – When I am working with a client for the first time I always ask, “What are the reasons customers will do business with you?” In addition, I ask for the exclusive reasons that separate them from competition. In almost every case their responses are incomplete or the client struggles to provide an answer. Can your sales force recite the benefits of your company/products/services to your customers?

6) Relationship selling – Most companies say their sales force is their vehicle for this effective selling strategy. Additionally, it must be practiced at the sales, marketing and executive management level as well. When problems are not resolved and there exists no relationship at higher levels, decisions will go against you just about every time.

7) Service – Everyone claims to have good service. The problem is this usually is not what the customer says. The answer is you should have the best service. For a distributor, service is almost everything. During the depression that started in late 2008, did you reduce inventory or add? I know of one who increased and marketed that valuable benefit. The result was that while everyone was down double digits they were up.

8) Change – If you are not making changes to improve all facets of the business, you will miss opportunities to grow profitably or fail. Change must be the culture which is fed, nurtured and rewarded.

9) Marketing oriented approach is key – Ninety-five percent of all CEOs, presidents and COOs are schooled on the operational and financial side of the business. They concentrate on cost controls to make the company meaner and leaner. While revenue acceleration is important, history reveals that executives who follow a path of acquisition to increase equity, do not necessarily increase profitability. While a safe approach since it is usually a financial mathematical formula to improve ROI and profits, the benefits can be accelerated through the concurrent development of new products/services to serve customer needs and differentiate the organization. Unfortunately, the “new development” element often falls short. There is a greater need than ever before for leaders to be more marketing/sales oriented to meet the needs of the future.

Stan RydzynskiStan Rydzynski is an associate partner at Channel Marketing Group, which helps manufacturers and distributors in the construction, industrial and energy industries. Reach him at (919) 488-8635 or

This article originally appeared in the Nov./Dec. 2012 issue of Industrial Supply magazine. Copyright 2012, Direct Business Media.



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