It is a matter of position
Do you want your business to be different?
Listening to the Daytona 500, an announcer commented about the driver in the lead in the second half of the race. The driver had his spotter convey a message to the other drivers stating they should stay in single lane formation in the inside lane.
There was a problem with the outer lane in that cars could not get together to challenge the inside lane. Surely, any driver that would move to create a middle lane, or try to band the outside lane together would quickly find themselves falling back.
Any race fan has seen this scenario play out many times. Of course, with this race as with any race, anyone driving in this formation is fine with staying in line only until the leader makes a mistake, there is a good opportunity to pass, or the race is about to end. For in the racing world, anyone that is competitive dislikes the idea of racing for second place.
Therein lies similarities and differences between racing and our part of the racing world.
As the race continues, each racer changes their tactics. Their strategy does not change; they still want to finish first. But the racer will use multiple tactics as well as change their tactics. Whatever they do, they will no longer just follow the car that is leading in the inside lane.
The business of selling to racers utilizes the same concept. There is a single strategy, win, and multiple tactics of getting there. While we will leave each shop owner to define what winning is to them, they all experience a changing marketplace; just like the local racer can experience changes in a heat and a feature.
Whether you sell fuel or parts, or if you are a fabricator, engine builder or anyone else within the industry, we are all assured of change. The only two questions are, “Will you do something when change comes?” and, “What you do when change comes to you and your business?”
The challenge can come in various forms. Perhaps the challenge comes in the shape of declining sales; this could be the closing of a track or a track that eliminates a class of races. Sometimes it is an area where older racers are not being replaced by younger drivers. It can also be a local competitor who has suddenly gotten aggressive in their drive for market share. And of course, for many products there is the Internet.
A second challenge can come in the form of increased operating expenses. If these are fixed operating expenses, those that are not tied directly to revenue, this challenge has to be overcome by finding ways to eliminate the adverse effect they have on the bottom line as they are going to be there whether you sell a little or a lot.
The third challenge to your business can come from declining margins. Again, there are multiple factors that can cause this; anything from a competitor who wants to buy your customer’s business with lower prices to a shop that simply applies a multiplier factor to every item in determining the price.
The challenge often occurs as many businesses are looking in the wrong place for the solution. They are looking at “what” they are selling to find the answer. They think the answer lies in simply finding more customers to sell these same products or services to. They attempt to do so by enlarging the geographical area of their business or perhaps by trying to take business away from the competition.
The problem with either of these solutions is that the challenge in one area is most often the same challenge in another area while the most frequent tactic of taking the business from competition requires the dropping of prices. Neither of these look like workable solutions.
An alternative is to look in another direction; the true reason behind this change is the customer and how they have changed. Therefore, the solution must not be in the “what” we sell, but instead be in paying attention to the “who” we sell to and how they have changed.
The focus of “who” changes the search for more customers for the products and services you currently offer to looking closer at the existing customer and finding the wants and needs of this customer.
This could lead to a business that offers services in addition to products. The addition of products that relate to “who” have been shown to increase the loyalty of the customer to the business simply because in leaving the initial business will mean the customer will likely have to find multiple new businesses to supply the various products, and services.
Perhaps the business changes the hours of operation to non-traditional hours because of when the customer wants to make a purchase or needs help. Perhaps the change comes as you add a trailer at a local track.
Your business might help to start a new class of races at the local track. The business that finds a decreasing number of new people coming into the sport may find an opportunity to create a related business that teaches people about the sport of racing. You might create a school that is held several times a year that brings together manufacturers and even related companies within the industry to answer questions of potential new teams and drivers.
Again, the strategy of your business is to win. Unlike racing, there can be multiple winners as each business gets to define “winning” for themselves. The problem in the industry comes when several businesses have the same definition for winning and they find themselves battling each other. The battle is going to create the very challenges we have defined; decreasing sales, declining margins, and increased operating expenses. Any one or any combination of these issues lead to a diminished bottom line.
The decision of changing a business to look at the needs of “who” as compared to trying to find more customers for “what” they currently sell, requires a very different thought process. It requires the business owner to divorce themselves from the products and business model that has gotten them to this point.
However, the reality is that for many businesses we have reached the end of the line for the way they have been doing business. The question is whether the business wants to continue in some new form, or be like the racer who simply could not try a new tactic and finished the race somewhere back in the pack.