The Facts of Business Life (37 page)

Finally, not every negotiation works out. It could be because the buyer decided for some reason that he or she wasn't interested in the deal after all. It also could be because you realized that the buyer you'd been pursuing wasn't going to be able to provide you with what you wanted. Regardless of the reason, you may well have to go back to one of your previous candidates to re-present the opportunity. Unfortunately, in a situation like that, you're likely to have to do some damage control, and that's hardly the strongest position to be in. If you should find yourself in this position, the best strategy is to say that you simply picked the wrong candidate for whatever reason. It's important to give a reason, though, because the potential buyer will otherwise think it was about price, which may not be the case. Of course, no one likes to have to start all over again, but if you have to, there's no reason why a second—or even a third—negotiation shouldn't be successful.

There are essentially three marketing concepts that you, as an owner, must keep uppermost in your mind. The first, of course, is that if you don't market your business, you won't have one. The second is that the more effective and well thought out your marketing is, the quicker your business will realize its goals. And the third is that the best marketers are not the ones who spend the most money, but rather the ones who get the most out of the money they spend.

As I have shown, these three concepts must be applied, as appropriate, at each of the five levels of business, that is, on the planning levels as well as on the action levels. What that means is that if you want to achieve success, maintain that success, and get the kind of reward at the end of your business career that you are entitled to, it is essential that you learn everything you can about your market, design both internal and external processes to facilitate sales, plan and execute sensible internal and external marketing programs, and make sure you and all your employees know how to attract the customer, sell the customer, and keep the customer.

Marketing represents one of the highest costs your business is likely to incur, but it's even more expensive if you do it wrong or don't do it at all. This is why the facts you learn during your research at Level 1 have to be matched to the processes you develop at Level 2, and then implemented at Levels 3, 4, and 5. And it's this orderly sequence that provides you with a valuable tool with which you can compete, succeed, and maximize the opportunity you have decided is right for you.

The Marquis of Queensbury Rules do not apply in free markets. Competition for customers and their disposable income, that is, their money, is the order of the day—every day. So if you're an owner of a small or large business, an entrepreneur, or an investor in any of these enterprises, the law of the jungle applies. And that means you have to be strong, smart, and agile, or die. The reason it's this way is that the marketplace is finite, meaning there is a limited number of customers and money to be spent. And it's these customers, and their money, who will determine your fate. It's not a friendly battle, the stakes are high, and the difference between success and failure is as distinct as night and day. If you don't understand this concept, or don't like the idea of it, business ownership is in all likelihood not for you. That's just the way it is. The marketplace is a war zone, and the battle never ends.

If you think I'm overstating the situation, think about the last recession. As of this writing, the economy seems to be starting slowly back on the road to recovery, but there's been a lot of damage done. Home builders, car dealers, banks, financial brokerages, real estate brokers, and other businesses have had to close. Literally every industry has been affected in one way or another. Because potential customers have limited disposable income, businesses find themselves competing for sales not only within their own industries but with other industries as well. Credit for businesses and consumers is harder to get, and unemployment is high. And fewer people working means fewer customers and less business for everyone. In addition, because of the economic uncertainty, those fewer consumers have slowed down their spending. As a result, the competition has become fierce, which has led to all-out warfare based on price, giveaways, rebates, extended hours, and all kinds of event-type marketing. If this isn't a war zone, I don't know what is.

One of the things that makes competition difficult—not just in downturns but all the time—is that your competitors don't all compete the same way. Some companies are aggressive, some are lazy and unmotivated, and others are moderately successful and content with their market positions. Moreover, there are some companies that compete on price, while some compete on location or convenience. Others compete on service or the quality of their products, while still others compete on depth of selection or on the basis of their market reputations. And these are just some of the more common competitive niches owners develop. This presents a problem because, being so diverse, your competitors are hard to pin down. Since they all have different perspectives, they all have different tactics, so the best you can do is try to anticipate what they're going to do. And that's not easy, and it's not going to get any easier.

But there's also another important difference in the ways companies compete that makes the war zone such a difficult place to do business. Some businesses fight hard and cleanly, while others, frankly, cheat in a variety of ways, and still others operate in a gray area by using half-truths, innuendoes, and misleading statements. As difficult as it is to compete against companies that fight fairly, it's even harder to compete against those that don't. While knowing this is true doesn't make competing any easier, one thing you can do is encourage customers who have had bad experiences to report these businesses to your local Better Business Bureau. Thankfully, while there are certainly companies that operate this way, there are still more honest competitors than dishonest ones, and eventually these questionable businesses close down. In addition, with today's social media, it's hard for a bad business to hide, which means they won't survive for as long as they might have 10 years ago. The point is that from time to time your business may lose customers to these shady operators, and as upsetting as it may be, you can take comfort from the fact that they won't exist for long and the customers you lose to them will be back, especially if you keep track of them.

The bottom line is that, whether you like it or not, all these competitive realities are continually in play. They are also always in a state of flux. That is, you never know when one or more of your competitors is going to make a decision to change direction or tactics, and that makes an already volatile marketplace an even more volatile one. Ultimately, there are only two possibilities in the marketplace war zone—you win or you lose. If you win, you make money. If you lose, you not only don't make money, you lose your investment. In fact, if you lose, you not only get your butt handed to you, you pay for the privilege—and in front of your friends and family.

The Benefits of Understanding the Marketplace War Zone

• Understanding the marketplace war zone helps you evaluate the competitiveness of the market, consider how others compete, and determine if it's a marketplace you can survive in.
  
• Understanding the marketplace war zone enables you to choose a competitive niche and clearly market to it.
  
• Understanding the marketplace war zone helps you recognize lazy and incompetent competitors that are vulnerable to attack, and shows you how to attack them successfully.
  
• Understanding the marketplace war zone helps you recognize competitors that have become complacent and lost their competitive edge, and how you can take advantage of it to increase your market share
  

The Realities of the Marketplace War Zone

• The marketplace is not always fair; someone is always looking for an advantage.
  
• If one or more of your competitors crosses an ethical line, it doesn't mean you have to go there yourself.
  
• Price as a competitive weapon is not as important as many people believe—it should be only one of the many weapons in your arsenal.
  
• Keeping up with your customers' wants and needs is a challenge, but keeping up with your competitors' changes and tactics is equally important, and something that all successful businesses do.
  
• Winning is a serious business for every successful business, so if you try to take one of your competitors' customers away, you should expect them to fight back.
  
• Competing in the war zone means if you find a competitive edge, you should go at it hard because your successful competitors will do the same.
  
• New innovations in products and technology constantly change the competitive landscape, so in order to compete successfully you must stay up to date.
  

There are three major elements that are critical to success in the marketplace war zone: the products or services you sell, how well your business operates, and how your business competes. Although these elements are extremely different, they are connected, and understanding this connection is important to a business's long-term success. Exactly how they are connected will become clear as you learn more about each of the elements.

Not all products or services are viewed equally by consumers. Some companies have inherent advantages over others in the marketplace. Rolex watches and Mercedes-Benz automobiles, for example, have a reputation for quality. Similarly, a company that's been around for a long time has an advantage over a start-up simply because of its longevity. Newly opened big box stores such as Best Buy are also likely to take customers away from even thriving local businesses. Having advantages like these leads, not surprisingly, to greater sales, and greater sales lead to higher gross profits, which is the reason you sell things in the first place.

In the 1960s, for example, if you owned one of the four “C” franchises—Caterpillar, Cadillac, Coke, or Chevrolet—you were most likely a millionaire. Ironically, these brands were so strong at the time that even if you were only a mediocre owner-operator, you could still be very successful. Customers want what they want, which in a competitive market means some products are far easier to sell than others. So if you have one of these “A-list” products, owning a business and competing in the marketplace is going to be considerably easier. Current examples of products like this include Pepsi and Coke in the soft-drink market, Harley-Davidson motorcycles, and Nike in sports equipment and apparel, among others. Perhaps most important, selling products or services that already have a strong presence in the market can serve as a foundation on which to build an aggressive and highly successful business.

But whether or not you offer a dominant product or service, it's always appropriate for you to be both concerned and optimistic. That's because the market is constantly changing, and what was true yesterday isn't necessarily going to be true tomorrow. Look, for example, at the “C” franchises mentioned earlier. Of the four, only Caterpillar has remained basically the same. Coke is still dominant, but the rules have changed. The company has bought back most of its franchises and distributorships, so while the brand is still strong, a lot of the owner-operators are gone. And neither Chevrolet nor Cadillac dominates the marketplace anymore. In other words, three quarters of the most dominant brands in the world have shifted over less than one lifetime.

Will Google exist in 20 years? It's hard to think what would replace it today, but tomorrow, who knows? RCA Victor and Capitol Records, Oldsmobile and Plymouth, AIG and Bear Sterns, AOL and Exxon, and many more, have disappeared or are only remnants of what they once were. The point is that having a successful product today is no guarantee of success tomorrow, and it's important that you, as an owner, be aware of that. This is true for the service industry as well. At one time there were blacksmiths everywhere, but today they mostly ply their trade in restored eighteenth- and nineteenth-century villages. Nor are there any more electronic or appliance repair shops because the prices of these products have fallen so dramatically, it's usually better—and cheaper—to buy a new one than fix the old one.