Increasing competition and challenging economic conditions seem to be “the new normal” in every industry and business. Often, there is an assumption that this new reality is a bad thing.
History has shown us, time and time again that businesses can start, grow, and thrive in any economic environment. There is always room for any business to survive, grow, and thrive.
In order to be one of the companies that grows and thrives, however, you need to ensure your business is not relying on BAD profits.
What is a BAD profit? Is there such a thing?
Yes, They Really Do Exist
To steal a line from that famous movie, Yes, Virginia, there really is a BAD profit.
And BAD profits are incredibly dangerous to the long-term health of your business. They’re dangerous because they are the biggest cause reduced profit when economic and market conditions step up to challenge your company.
My Definition…My Definition…My Definition…
So let’s define what a BAD profit is.
BAD profit is the profit your business makes from customers that are currently dealing with you, but are either unhappy about it, aren’t fully satisfied, or simply feel like you’re taking them for granted.
These customers create BAD profits for your business, not because there is anything wrong with them, but because there’s something wrong with your business. Any profits from these clients are only short-term. They can (actually, they will) literally disappear overnight if a new competitor (or old competitor) comes along with a unique way of making them happy, and feel valued.
Like An Axe Hanging Over Your Business
BAD profits are like an axe hanging over your business. And the axe is being held up by a mere thread. The slightest bump, the axe falls, and you see your business and its profits quickly chopped into a much smaller entity.
BAD profits are easy to ignore. It’s easy to make yourself busy dealing with the customers who phone in, walk in, and currently buy from you.
But it’s hard to stop and yourself if those customers are at risk of leaving your business if another competitor moved into your area. Or if an existing competitor makes some strategic changes in your market.
You Can’t Ignore Them When They Grab You
But you can’t ignore BAD profits when they make themselves knows. When a competitor who “gets it” shows up in your market, and you start to lose customers and profits.
That’s when the blame game usually starts. Common comments that indicate you’ve been hurt by BAD profits include, “We just can’t compete with the big guys”, or “Customers don’t appreciate what we do anymore”, or my favourite, “All people care about these days is a low price.”
So don’t ignore BAD profits in your business. Ask yourself the hard question. Do you have customers who are just waiting for something better to come along?
If you do, fix it. Fast.