Don’t fall in love with your business

With business becoming more problematic in the current economy, objectivity has become an important component of management thinking. Although as an entrepreneur you must enjoy what you do, there is a danger in falling into a situation where you believe that your product or service is superior in every way to every competitor in the marketplace.

Ira Nottonson

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There are even some people who say "I don’t have any competitors because no one has the value that my product or service has." Make no mistake, everyone has competition. You may have the most unique toy in the world, but don’t lose sight of the fact that you are competing with all the other toys on the shelf.

Although you don’t necessarily have to share your financial statement with your employees, it is essential that each of them knows the costs that are involved with the manufacture, sale, or distribution of your product or service. They should be made aware of the cost of raw materials or of the component parts necessarily to sponsor your product in the marketplace. They should know that the advertising costs against revenues are absolutely essential to produce the necessary customer base.

This is a reason to have communication with all employees to ensure that they understand the basics of business. It is in this way that they will also appreciate the need for careful and constant examination of the details behind the selling. They will become a more responsive part of your team; they will respect the expertise and experience of others trying to generate the same profit at the end of the day. After all, profit could mean raises and benefit.

Looking at the competition will always be a high priority in your constant and careful appraisal of your business tactics in the marketplace. Understanding that their costs against sales is similar to your own, any change in their pricing should be a factor that you need to consider. Are they buying more at less cost per piece (quantity discount); have they found a more reliable or less costly source for their raw materials or component parts? Or are they merely lowering the price so that they can stop carrying the product or stop offering that service? In other words, if you know the motivation behind the activities of your competition, it might cause you to take a reappraisal of your buying and selling philosophies.

If things are going well in your business, you may have achieved something very special. Your personnel may be working well as a team. You may have succeeded in lowering costs of production when your competition has not. You may hit upon a marketing scheme that has accelerated sales. There could be any number of things that could lead you to that terrible position of complacency.

If there is any concept in business that is sacrosanct, it is likely that the only constant about business is change. Just when you think everything is hunky-dory, one little change could dynamically affect your business. If you’ve been careful and have been monitoring the success as well as all the details on which that success is built, you will probably notice the change in timely fashion. If you’ve failed to maintain the appropriate monitoring system, you could find out about the change after the fact … and it may be too late.

Don’t become complacent about your business and feel that you’ve achieved that highest plateau of success. Conventional wisdom should tell you that it is temporary at best. Keep aware, stay in charge, anticipate everything you can. It took a lot of work to achieve that success in your business. Don’t blow it!

And don’t forget to vote. Your business may depend on it.

Ira Nottonson is a business/legal consultant for small businesses and a business valuation expert. He lives in Boulder and can be reached at (303) 447-9672 or e-mailed at [email protected]. Nottonson will be teaching "Secrets of a Successful Business Plan" at the Boulder Chamber of Commerce. Call the chamber at (303) 442-1044 for information.