aybe you are overlooking it – your business structure, plans, models Our members are telling me that their traditional business of the past has now become saturated with too many bidders offering incredibly low pricing. We have known for some time now that the public bid market has been overrun by the low price mentality. With bids that resemble our material cost and many end-users doing their own installs, what’s next?
One option is to incorporate innovation and creativity to your business focus. I believe that innovation can be done organically at the integrator level and that we don’t have to rely solely on the manufacturers to push it to us. Whenever possible we should partner with a trusted, engaged and loyal vendor and leverage their expertise if the opportunity does exist. Developing or co-developing unique solutions will elevate your technology solutions above the price sensitive bid market.
If you really believe that the traditional market is gone, then you need to invest in innovation. Recently I’ve seen some great examples of members growing their business by doing things very differently, rather than exactly same as others. Taking an opposite or unique approach to solve a clients’ need can open doors and demonstrate that you are willing to invest in a partnership with them. It requires capital and risk and it may not always work, but it certainly could. Rarely can you operate both a competitive bid company and a highly innovative company under one organizational structure.
Innovation means nothing if you can’t deliver it with a strong statement of value and true ROI for your customers. The days of the uninformed customer are basically over. In that case we have to step up our game and even do more to bring confidence to the educated end-users that they are receiving value. Or, in the low cost traditional system model, providing the best prices for what they already know they want.
Most integrators I know are sticking with what seems like a safer path in hopes that the traditional business will bounce back along with the overall economic recovery. Even that has risks as there is no certainty that competitive pressures and number of bidders will ease as more projects present themselves.
If you hold onto the traditional business model, I would define your scope and scale of projects on the traditional system types as clearly as possible. How good is your company at finding the bread and butter projects? Make it a priority to go after the project type that fits best with your line of business. If you’ve structured your business to focus on the larger scale projects, then it may be best to pass on what used to be that traditional $10k to $30k project. Evaluate everything; especially if your sales compensation plan encourages your sales team to find the smaller, more traditional projects.
Understand the unique business issues of the size and scope of projects and markets you target. One of the more troubling cash flow problems is the peaks and valleys of doing fewer yet large scale projects. Yet on the other hand, many of our members just aren’t built to be competitive doing the smaller jobs anymore. Their overhead, methods and processes just don’t scale down to being competitive on smaller jobs. Several companies have kept a more traditional product and service mix but have become quite innovative in offering alternative project financing. Leasing and other finance options should be explored to enhance your traditional sales.
For the innovative company, ask yourself what are you doing to bring confidence and value to your clients who are beyond the traditional system buyer/user? For the traditional company, what are you doing to find the traditional project where the other competitors are too big, or have too much overhead to be interested in?
I’m fairly certain that 2013 will be more successful if you can excel in one of these two strategies, but not try to do both within the same organization. C