A sailor who doesn't know what direction he is traveling will have trouble discerning between a good wind and an ill wind...
Just as the sailor has to steer his ship as he navigates the seas to his destination, business owners have to steer their companies through daily challenges and decisions. Making the right decisions and course adjustments are much easier if you have a plan and a destination in mind. Business planning is not a one- time process. Like the sailor who is constantly adjusting his course, businesses must also adjust course.
The current global and domestic economy has certainly presented challenges to many business owners, but also some opportunities. If taking market share is part of your strategy this may call for broadening your product mix. Doing this requires intelligent research and planning - and every plan needs to include these key elements: Analysis of strengths and weaknesses of both your company and that of your competition.
SWOT: Strengths, Weaknesses, Opportunities and ThreatsThe SWOT Analysis is a useful tool to determine internal factors (organizational) and external (environmental) factors affecting your company. Identifying strengths and weaknesses is basically an assessment of your company’s operations, products, services, and competition with the goal to capitalize on your strengths and minimize or eliminate your weaknesses. It is equally important to identify both opportunities and threats so you can either take advantage of a situation or ward off one.
Understanding the strengths, weaknesses, opportunities and threats of your company, and your competition’s, will help you determine your competitive advantages and disadvantages. This will help to position your products and company in the market and develop the ideal product and service mix.
Don’t overlook these important steps:
The Competitive Analysis is meant to reveal your competitors’ strengths and weaknesses so that you may take advantage of them. Throughout history, military leaders who have emerged victorious have primarily been the ones who studied the strategies and tactics of their rivals. The same is true in business.
"Know your enemy and know yourself and you will always be victorious."
-Sun-tzu, Chinese general and military strategist
These characteristics are based on your competitors’ assets and skills that make them a viable contender in the market. Once you determine what makes your competitors “tick,” you can start developing a plan of action that will help solidify your presence and leadership in the marketplace.Remember though, that knowing your competition is a continuous process. Unless they are standing still, you need to keep a constant eye on their course too. You must know your competitors and your customers as well as you know your own company.
Positioning Your Product
Differentiating your product and services from your competitors is "Positioning" in marketing parlance. Unquestionably one of the most important steps in business planning, it determines how to make your products or services stand out in the crowd, create value in your market and maximize your profits. Positioning creates the perception of your product or company in the marketplace. Comparative examples are:
• A commodity product equal to the competition that might create volume vs. a high quality product that may produce lower volume but justify a higher price;
A key strategy in Positioning is determining your “value proposition.” If you’re interested in reading a bit more about this, here’s a short and simple overview• A company with a very knowledgeable staff vs. one positioned as a help-yourself operation with great prices.Commodities provide the opportunity of high volume sales, where demand is already established. When selling commodities, the key is to differentiate your company with the service you provide. Commodities can also open doors to allow you to introduce high end products that are more profitable. High end products exude quality and credibility that can generate more opportunities and higher margins. The resulting product mix can perpetuate sales, increase market share and provide a higher average gross profit. Remember, if you don’t differentiate yourself, your competitors will do it for you.
Business planning is intelligently collecting information that allows you to realize the strengths, weaknesses, opportunities and threats to you and your competition. With this analysis you can position your company and its products and services in an advantageous position that differentiates your company from the competition. Whether you do this yourself or use the services others such as my company, Ceramic Tile and Stone Consultants, or someone else from the Floor Covering Institute, I hope you do it - and know that business planning is a must for success.
Donato Pompo is founder of two well-known flooring industry companies focused on improving everything about ceramic tile and stone flooring and the businesses that produce and sell them. They are Ceramic Tile and Stone Consultants (CTaSC) and the University of Ceramic Tile and Stone (UofCTS).