How well do you understand your business?

What do you know about your business? More importantly, what do you know about getting and retaining the business that produces the income for your company? The initial answers will often be “no one knows our business better that we do “– but is that a satisfactory answer? How do you know? Does your knowledge of your customers and your own business organization and methods bear close examination?

For those responsible for maintaining and developing the financial income of any business, the efficiency of getting and maintaining business and a full understanding of the process is all important. So, how should this be attained?

Research is the obvious process for obtaining information to establish a clear understanding of the business environment and current customers. But the validity of the knowledge obtained will be dependent on the nature of the questions asked, of whom they are asked, and who asked the questions.
Managers need to be clear about what they know, with certainty and evidence, and what they think they know, especially where “facts and opinions” are taken for granted. To paraphrase Donald Rumsfeld, in business, there are the things we know, the things we don’t know and the things that we don’t know that we don’t know, – i.e. those aspects of the business and market of which we are unaware.

Effective management derives from making assessments of conditions and evidence, then framing decisions and actions. To do this it is important to have as complete an understanding as possible regarding how the business operates in finding and serving its customers and how much is really understood about its own business operations in getting and retaining customers and profitable business.

Is the management of all those resources involved in getting and maintaining the necessary income for the business efficient and effective? How do you know? Performance, whether by an organization or individual, may only really be measured by their results in comparison to those planned. Many businesses still plan on the basis of making a percentage increase in sales income with little regard to market condition, or the efficiency or effectiveness of their organization in producing income or profit. Business development planning is essential for every business, but it must be based on quantifiable objectives and not qualitative statements and ideals. Management achievement may then be compared with that which was planned.

Effective business development planning should be about balancing the resources and investment available, with the potential revenue opportunity. Embarking on a selling exercise which produces orders in excess of what the business is able to produce has the potential to be seriously damaging to the business. An inability to fulfil customer orders may have long term damaging effect on the company reputation and future business. Similarly, the requirement to fund unplanned expansion to meet unexpected demand could undermine the business financially.

All business planning should show what money is to be spent and where, and to what effect, so that all planned actions should have clear and quantifiable deliverables.
Most importantly, Business development plans require some prime objectives on which the plan is based together with a time table for their achievement. In addition those plans should include detailed contingency actions if the prime objectives have not been achieved by the target date. Successful managers cannot afford to wait for “something to turn up” if specific objectives are not fulfilled on time and must be able to enact a “plan B” immediately and smoothly, to replace unachieved income.

Understanding the requirements of both the existing and potential customer base is very important. A clear understanding of each customer’s business may reveal existing and potential opportunities to resolve their problems and increase sales. An analysis of sales by product or service, according to market segment and application can help to show how the customer base both purchases and uses the product. Regular customer surveys also help to show how product and services are perceived and received, which may bring to light weaknesses in the product and especially in customer service. Having a clear understanding of the customer base in terms of its trade or industry, its geographical distribution, and cost per sale can help in the effective management of order size and customer credit requirements.

Managers cannot know too much about how their business actually works. Effective Business decisions should only be based on quantifiable evidence. Managers must be clear about what they know about their own business, their competition, and especially their customers, but they also need be clear about what things they don’t know, and not make decisions based on unqualified assumptions. It is not just what you know, but what you don’t know which determines how well you understand your business.

© N.C.Watkis, Contract Marketing Service 06 Jul 11
Contract marketing Service, (Marketing Performance Consultants)

July 15, 2011   Posted in: marketing management

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