What Happened to the Old, Tried-and-True Ways of Expanding Business?
Today, the prevailing attitude says that, in order to grow, you must expand into markets about which you know little. Look at what’s occurred in just the past couple of years. Manufacturers of carpet have made forays into retailing, commercial contracting and wholesale distribution. Manufacturers of installation products have begun to sidestep distributors by selling direct to big-box stores, commercial contractors, retail co-ops (buying groups), and others.
Everybody wants to grow bigger, even if it’s not all that profitable from a return-on-investment point of view. I’ve wondered what happened to the business principles that I and others in my age group were taught when this industry was in its infancy. I’m talking about principles such as honor, loyalty and personal one-on-one customer service.
We were taught that it is much easier, and considerably less expensive, to expand business by working closely with current customers rather than trying to develop new ones. We were taught to develop a mutually profitable business plan with our customer, taking time to conduct periodic reviews and making alterations as conditions warranted. We were taught to get to know our customers’ businesses as they pertained to our products and/or services. Armed with that knowledge, one could act as a trusted adviser and help his customer grow his business. In fact, over time, you could become one of your customer’s greatest assets.
Today, all too many of the companies and people who call on customers can’t see the potential in their current clientele and, regrettably, look elsewhere for their growth. Manufacturers continually strive to improve their operations to produce more and more product at reduced cost.
Once this is achieved — if it is — they look to sell to a customer base other than the one they originally depended on to establish their place in the business. They expand in the same market arena with additional distribution, which only shifts the business and cuts up the market even more. Seldom does this approach result in a greater market share without a much higher cost of doing business.
It seems to me that there are other markets they could pursue with new products specifically designed for the targeted market. Such an approach would both protect their business with their current customer base and allow for additional growth. I believe you should remain loyal to those who are loyal to you, and support them steadfastly.
The grass on the other side of the fence is not always greener. Often, it pays to stay with those who brought you to the dance, so to speak. Chances are you’ll get to know each other very well and, together, you can expand both of your businesses.
The future scares me, and it should scare you too. Unless we get back to those old, tried-and-true values upon which this industry was built, the road ahead may be awfully bumpy. What’s next? It’s up to you.