STRATEGIC EARLY WARNING SYSTEM

Being the Right Company

Every business owner knows that being successful means satisfying current customers and creating a pipeline of new customers. The key ingredient to this process reinforces the old dating strategy of “finding the right person means being the right person first.” Being the right kind of business for your customers requires a continual self-assessment and a willingness to address the old habits that don’t work anymore. Generally, this assessment stops at the two major roadblocks of gaining too few new customers to replace the lost old ones and not enough working capital to finance any changes.

Ultimately, this self-assessment leads to the conclusion that being the right company for some current and future customers is beyond our control. After all, a small company has limited capital, and resources that seldom reach beyond the day-to-day demands already in place. An example of this lack of ability to compete is the disadvantage our region faces when quoting against lower labor rates. While significant debate has taken place over the size of the gap in labor rates, it is almost a universal truth that it does exist.

Dealing with the issue of losing customers to low-cost off-shore manufacturing has been going on for decades. However, this still remains one of the most painful kinds of separation because it is the hardest for most local businesses to cope with. A recent survey of manufacturing organizations in the Southeastern region revealed that ninety percent of them believe that “off-shoring” of products for production continues to be a major deterrent to future growth. Eighty percent of those respondents believe that local businesses do not have the ability to stop the effects of off-shoring.

In the terminology of turnaround business planning, the easiest way to find new customers is to look back at the old customers who “divorced” you in the first place. However, the first challenge is to convince a failing company that it is worth the expenditure of limited time and resources to pursue that former customer lost to off-shoring. Pleading to their patriotism with “Made in America” can help, but a more effective strategy is to show them that an American-made product can be produced at a comparable cost.

While the answer to this problem is complicated, the basic ingredient is to change customer perceptions through programs that attack the off-shore competitor’s vulnerabilities such as crippling cash flow and an elongated supply chain. The Manufacturers Alliance of Bucks and Montgomery Counties is addressing this issue head-on. Future articles will discuss the strategies and the role that local businesses can play in becoming the right company once again for their “divorced” customers. If you would like help with the assessment aspect of your business analysis, please feel free to contact the SEWN program for an experienced outsider’s perspective.

Contact Gregory Olson, Director, SEWNSE Region, 215-458-7580, , to learn more www.steelvalley.org.