When you go to the doctor, he or she will not prescribe a solution to your symptom without a diagnosis. Similarly with companies: large, small, start-up or established. To identify the underlying problems, we need to make a diagnosis.
First of all, what does it mean to struggle? The specific symptom could be inadequate sales, poor quality, inadequate personnel, underfunding and many other permutations. However, an important and often overlooked issue is this: Does this activity have the potential to be valid? In fact, not because you decide to be in trade means that there is a market for the goods and services you offer! Have you done adequate market research? Have you chosen an activity that simply fits your talents and desires? How much planning did you do before you started?
moment, after diagnosing the problem or problems, it is fundamental to treat each identified problem, methodically, objectively, and be ready to change course whether essential. The result of this process could lead to the closure of the activity to stop the cash discharge. It is a good idea to seek advice from a respected and knowledgeable person who will tell you the truth, not just what you believe you want to hear.
Sometimes, finalizing the main purpose and strategy of the company can be difficult because finances (normally a lack of them) can distract you and make you look for a path that is not optimal. This is why it is essential to be patient while adequate funds are raised to start.
I would recommend to an enterprise with a considerable problem to decide its strategic path. This indecision led the company to struggle to find its way while burning money. Should he go for a niche market, or should he try to gain a larger share of the larger market? The first will produce less customers, products with higher added value, greater attention to customers and higher margins. The moment would be a much wider market, lower margins, more customers, fewer value-added products, more standard products and probably less profitable.
The executives discussed the two alternatives forever and were divided. Meanwhile, the company has struggled. I asked them to consider these four questions:
What markets are you serving nowadays?
Are you serving customers with greater added value and mass?
Are you delighting your customers nowadays?
What are your main skills?
They were trying to function in both markets and they did a poor job in each, so they lost money. The customers were unhappy and returned the products regularly. The company had not identified basic skills so they weren't using these skills. The executives focused on "making money" to stop cash drainage. But this approach did not satisfy the customers who were fleeing. Above all, while the problem was clear in hindsight, the managers did not try to diagnose the condition of the company; they saw the problem as a "cash flow problem" which was not.
After my initial discussion with the owners, they realized that they needed to diagnose the situation to find the causes of the problems to solve them. Quickly, they understood their challenge; they were not serving their customers. In fact, the activity was not focused; he headed in different directions with consequent massive cash drainage. Once the roots of the problem were identified, they made changes and set the company on solid foundations.
They decided to be a niche player and focused on serving specific customers while remaining attentive to market developments. A few years later, they were enthusiastic about the customers. nowadays the profitability of the company continues to grow.
By Michel A. Bell