I first came across this business diseas many years ago but I didn't know the name for it then. Now I do.
A relative in a business had started a new operation. It was one of those "new product - new market" combinations which is always the most risky path to growth. But for all that it was a growing niche market and the products were selling, albeit slowly.
Being a nearly minted and enthusiastic MBA I thought I would do some research. As an aside this relative referred to MBAs as "Master of Bugger All". He was probably right about that. To get back to the story I came up with some industry averages as benchmarks to aim for, only to be told "averages don't apply to us, we're different".
Turning a blind eye to performance indicators in a new market, particularly when choosing a risky growth strategy, is not a good idea. Needless to say, the new venture didn't last. They suffered from the disease.
It's called terminal uniqueness.
As you know, to succeed in the market you have to be different, to be unique. The Go To business. Without it potential customers have no reason to buy from you. And with no reason to buy from you there is only one basis for competition, and that is price. You don't need me to tell you the dangers of competing on price. You are fighting the battle of the clones.
You have to give people a reason to buy from you, and not your competitor. That reason will be rooted in the outcome you deliver for them. There is only one reason people will buy your product or service, and that is the benefit it delivers.
That benefit/outcome needs to be better than your competitors can deliver.
But there is one area in which you don't want to be different, where claiming to be unique can be terminal.
Before I explain this let me ask you a couple of questions:
1. Is your product good or bad? (I'm sure you will say "Good")
2. Given how good your product is, do you win as many sales as you should? (Few people would answer "Yes".) I'm sure you would like to sell more.
Conclusion: It's not what you sell that's the problem; it's how you market it. So, it would make sense to look at how you can win the sales you should be winning.
And here is the problem.
Very few small business owners and managers note of and study all the successful businesses in the same or related industries that they can. It is really worthwhile trying to determine what they are doing that makes them succeed, both in terms of their general approach and in specific things they do.
Marketing is just one of the key areas in which you can swipe and deploy. I would also add things like regularly measuring on key performance indicators and reporting regularly. I have my clients use a dashboard report to make it easier to spot and analyse trends and not just show the figures, but document WHY they are what they are.
Benchmarking is another, to determine where you may not be performing to industry averages. Regular reporting and benchmarking can reveal profit leaks that have been hidden away, holding you back and causing you to work harder and longer to no avail.
Why do people not do these things? Is it fear of been seen as different? They think up all kinds of reasons why swiping and deploying proven marketing approaches, why measuring and regular reporting won't work for them. Why their situation is different. In other words, reasons they won't succeed and get the same result.
Terminal uniqueness is the belief that your business is different, it faces situations unlike those faced by other businesses so proven strategies just won't work for you. It is called terminal uniqueness because thinking this way of thinking can, well, be terminal.
It can be so in a number of ways including:
You have to be unique in your offering, but not in your operations. Prevention is cheaper than the cure.
© Copyright 2012 Adam Gordon, Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?