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Use Your Strategy For Tough Decisions

As a child we grew up pleasing everyone around us, we learned that it is a great way of getting rewarded. Saying 'NO' is often considered as impolite and even rude as you are turning down a request of a person that would give you something in return. In our minds ‘NO’ means not complying. No wonder a lot of companies made it their company strategy never to turn down a customers’ requests. Unfortunately it is not always a good strategy!

"At one of my previous employers I was trained to answer every customers request with: "Yes of course we can help you, we are specialized in that product you’re looking for" In the mean time an operations manager scanned for any resource being able to spell the name of the product."

I guess you could call this a strategy but it is one that does not last and certainly not in time of crisis.

A lot of companies are struggling to keep their business nowadays. In the golden years they could afford to say 'Yes' to any request even if they could not deliver on it. Their once beautifully designed business plan which described their focus, had to make place for customer compliance or the will to please. They chose never to say 'NO' and turned their company in one of the undifferentiated firms all fishing in the same waters with the same bait, most probably being superb in no technology at all.

Over the past years they chose growth above differentiating as a strategy. They pretended to do everything ending up with numerous products to support, in which they most of the time had only one resource on whom to hang onto. It is a short term vision that always fails in the long run.

"Imagine a milk man that drives around every day delivering milk bottles door to door. Due to the crisis the revenue of his milk sales is gowing down. One day, a customers asks him if he can also deliver beef. The milkman sees a great new potential to diversify and to increase his revenue and diminish his overcapacity.

Once home, he slaughters his first cow and sells the meat to his customers making more money than the months before.

He continues in his chosen path and slaughters half of his cows. However at the end of the recession business picks up and he does not have enough cows to supply the increased demand of milk and looses some of his customers to his competitors. This is his core business which he decided to slaughter and sell off."

I am not saying you shouldn't kill cows. No, what I am saying is that you should remain focused on your core business. Make sure none of your side activities kills off your core business in the long run.

As an entrepreneur it may be your primary concern to survive in this crisis, but accepting any deal will not benefit your business. No one will thank you for saving the day if you did not think about tomorrow.

If you're struggling to keep your business together, it is time to get that old business plan out again. Return back to your roots and focus on the business you are good in and have already developed.

At one of my customers, management took the old business plan from the shelf again. As they were looking for their roots to keep business up and running, they found a service in the business plan they never developed before.

The CEO judged that it was the answer to stimulate growth in his company. Having no expertise on the service the company decided to invest in the new service in a new market. The company almost committed suicide but survived after cancelling further investments for that specific service. Experimenting in better days or at the end of recession is a smarter plan.

Get rid of every side business that you once started on request of a customer and which cannot survive on his own! Limit your services, and start being excellent in your core business. Analyze your business, which service did you once start to please a customer? Is that service contributing to the revenue of your company? If not, dare to turn your back to that business!

Every Entrepreneur knows that you can only grow by being a differentiator. Strangely enough it is this differentiator that is missing in many IT companies. At a certain point it was even fancy to say as a company that you are a One Stop Shop. Although if you don't watch out this quickly changes in an "Only One Time Shop", you only stop once and never go back. Several companies used the "One Stop Shop' strategy to broaden their service in the hope for customer attachment. In many cases this results in lower quality of service.

Keep in mind that developing 'a one stop shop" is only relevant if either you offer closely related services or you offer low value, undifferentiated goods for consumers who have no defined requirements. A supermarket is a perfect example of a one stop shop. An internet company selling domain names, web design and hosting could be another.

Defining your strategy is more than selecting a target market to work on. It is about designing a service that is superior to the market. It is better to be excellent in a few services then mediocre in lots of services. Stand out in the crowd for what you are, be confident to select only your customers based on the services you provide. And above all say ‘NO’ on non profitable services and services you are clueless in!

 
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