Time and time again, I hear business leaders complaining that their business is barely viable. Typical issues:
To get out of this mess, you have to do five things:
First posted 23 September 2007
- providing essential attributes of a service for free because the customer refuses to pay for it.
- allowing arbitrary changes in terms e.g. stretching out payment at no extra charge.
- giving away customisation for free.
- agreeing to prices below the true long-run cost (including cost of capital).
- the list goes on.
To get out of this mess, you have to do five things:
- develop a distinctive market offer which is designed to appeal to the customers you want and who are prepared to pay for it;
- understand in depth the operating cost model for your business, including the cost of risk and capital, and use that to define your absolute bottom-line on pricing and terms;
- understand your target customers and develop your business to sell and deliver your market offer to them;
- don’t sell to people who don’t want your offer;
- walk away from existing customers with whom you can’t do viable business.
First posted 23 September 2007