There are many strategies for generating sales, profitability and wealth in every industry. Your ability as an entrepreneur to create a profitable business where no business existed before is the key to your success.
In every market, it’s usually true that 20 percent of the businesses earn 80 percent of the profits in their industry. Some businesses, selling a similar product in the same market as their competitors, earn ten or twenty times as much as other businesses. Your goal should be to do the same.
Creating profits occurs when you produce a product or service that people want and need and are willing to pay for at a price that’s in excess of your total cost of producing that product or service. The key to business success has always been the same: “Find a need and fill it.” We all earn our livings by serving other people in some way. Your business goal is to find out what people really want and need, and then to give it to them better and faster than anyone else.
Hundreds of businesses have been studied to discover the secrets of market leadership. The three top secrets these companies share are:
- Operational excellence. The company has developed the ability to produce its products and services at a cost substantially lower than its competitors.
- Customer intimacy. The company has developed a close relationship with its customers based on an excellent knowledge of their customers’ business.
- Technological superiority. The company offers a product or service that’s superior to that of its competitors.
There are several strategies you can follow to create additional value for your customers and additional profits for yourself:
- Improve your product or service in some way so that it’s better than that of your competitors, at the same or a lower price.
- Produce or deliver your product or service to your customer faster than your competitors.
- Produce your product or service cheaper than your competitors, maintaining or increasing your level of quality.
- Offer better follow-up and support services than your competitors to go along with your product or service.
- Give guarantees and warranties of satisfaction that are more extensive than those of your competitors.
- Make your product easier to acquire and more readily available than those of your competitors.
- Make your prices and terms more attractive and convenient than those of your competitors.
- Include additional products and services with your offerings, at the same price.
The most valuable part of your business is your reputation with your customers. Your reputation in the marketplace determines how much you can sell–and the prices you can charge. The friendliness of your staff and the ease of doing business with you is also a key part of your reputation. Your credibility with your customers–the degree to which they see you as trustworthy and dependable–is what will keep customers coming back.
When selling your products or services to businesses, understand that they’re only concerned with how your product or service will affect their sales and profits. Businesses think in terms of saving time or money–or gaining time or money–by using your product or service. Businesses see your product as a solution to a problem that they have. What is it? How quickly does your product pay for itself in increased efficiencies?
Million Dollar Habits, 2nd Edition
Selling to individual customers requires that you focus on the improvement that your product or service makes in their lives. What does your product achieve for your customers? What does your product help your customers avoid? What does your product help your customers preserve? How does your product help your customers get better results in their lives?
As an entrepreneur, the most important question you can ask and answer each day is, “What can I do to increase the value of my products or services to my customers today?” The value of a business is determined by its ability to improve the life or work of its customers.
The key to creating profit has always been the same: It is to add value. In what different ways can you add value to your customers today? In what ways can you add value to your business today? One good idea to add value to your existing customers, or to new customers, can be enough to move you into the top 20 percent of businesses in your industry.
The goal of every entrepreneur is to seek out profit-making opportunities. Profit comes from adding value in some way, before your competitors do it. The number of ways you can add value to your product or service–and to your customers–is only limited by your imagination.