Situation: A professional services company wants to grow while maintaining the small company atmosphere that has been the key to its success. There is a limit to how many clients a manager can manage, and with this the reality that if the firm is to grow they will have to bring on more client managers and support personnel. How do you maintain your culture as you grow?
Advice from the CEOs:
To maintain your boutique atmosphere, consider hiring to fit your needs rather than to maintain a culture. Use team meetings to direct team members while communicating and instilling the culture that you wish to maintain.
Don’t risk diluting the strength of your client relationships. A $250K client who is fully committed to your service may have more demands than a $1M client for whom you only represent 10% of their business.
Service companies with the highest profit ratios rotate customer contact among several qualified people. What matters is the level of service provided, not the individual providing the service.
Grow by adding locations. Instead of growing vertically in the same office, grow modularly by spawning additional offices.
Create an optimally sized model for the level of service that you wish to deliver.
Design the organizational structure for this model and identify the order in which slots will be filled as business grows through each office.
Develop a service and organizational template with standard operating procedures, metrics, technology, and reporting.
Once the model is created, spawn it.
Focus your business. Define a niche that you can serve better than your competitors. Focus on this niche and develop a sustainable advantage over your competition.
Assure that your service delivery is seamless to the client and make sure that it remains seamless.
Offer a menu of service options and price options by the level of service delivered. Some will want to buy a Mercedes, and some will be happy with a reliable lower priced sedan.
Situation: A company has just learned that a new, much larger competitor is moving into their market. They are concerned that this may severely impact their growth and even their existence. How do you respond to new competition in your market niche from a much larger new entrant, particularly if the new player comes in with a low pricing strategy to buy market share?
Advice from the CEOs:
Take a lesson from those who survive a move by Walmart into their territory:
Boutiques and high service specialty stores survive Walmart – especially those that focus on personal service. Walmart does not provide the level of service that you find in one of these stores and doesn’t know their customers as individuals. Boutiques may lose some price conscious customers, but these are not the customers that provide good margin to them.
Use your personal knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
You may remain more profitable than the larger company, especially on a per transaction basis, based on your knowledge of the territory or business niche. Walmart can’t tell you the best product to perform a home repair.
Focus on your strengths in the market, and don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially services which are very personal.
Research the reputation and business practices of the new entrant in their other territories. What are they known for, and what are their weaknesses? You may be able to learn this by networking with their current competitors and customers.
If you are a multi-generation family business, consider promoting your “old world skill” and established reputation and expertise.
Situation: A mid-sized company has learned that a much larger company is entering their geography and market niche. This company is known to enter new markets with a low pricing strategy to “buy” market share. How do you respond to significant new competition?
Advice from the CEOs:
Accept the fact that you will lose some business; particularly from customers who driven more by price than quality and service. The flip side is that these customers are likely not your best customers.
Research the reputation and business practices of the new entrant in their traditional territory. What is their reputation? What are their weaknesses? Do your homework by networking with their current competitors and customers.
Take a lesson from those who have survived a move by Walmart into their territory:
Boutiques survive Walmart – especially those that focus on personal service. Upgrade your customer base based on personal service.
Use your knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
You may remain more profitable than the larger company, on a per transaction basis, based on your knowledge of the territory or business niche.
Don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially those involving personalized service.
If you are a family business, consider promoting your “old world skill” and established reputation and expertise.
Key Words: Competition, Geography, Market Niche, Walmart, Price, Personal Service, Reputation, Contacts, Boutique, Profitability, Family Business