Whit's World: Don't buy business - earn it
1 Jul, 2008 By: Marty Whitford Landscape ManagementSitting in a row boat with his buddy, a man points to a yacht and says, "I've bid against that guy a thousand times, and I always come out on top."
Robert Taylor, president of Houston-based BIO Landscape and Maintenance, shared the above tale of twisted perspective with me while we were discussing the impact of record-high gas prices and how companies should and should not try to offset them. Underselling yourself and our industry is an absolute "should not" if you wish to weather today's turbulent storms.
But business consultant Bruce Wilson says many companies in our industry are doing just that with their knee-jerk reactions to mounting competitive pressures. Despite absorbing fuel charges that, on average, are 33% to 50% higher than last year — as well as a host of other surcharges and price increases on everything from ornamentals and aggregate to waste management services to fertilizer and PVC tubing for irrigation — Wilson says, "many landscape management companies actually are bidding 5% to 10% less on projects this year."
All of us need to remember that not only is it OK to make money, but a healthy profit is good for us, our employees, the industry, and yes, even our customers. If our businesses fail to consistently earn healthy profits, we will lose the resources we need to attract, train, equip and retain "A" players. If we undersell ourselves, our people and companies will fail to reach their full potentials. If we don't net what we're worth, we'll be worth less and less to our customers.
Sure, competition is fierce and price is, and always will be, a major factor in purchasing decisions. But price isn't everything.
Previously having been self-employed for five years, I've been there. I know all about sometimes feeling a grave need to compete on price — to buy business at almost any cost. But the bottom line is that when we're "competing" on price alone (or even foremost), we're not really competing. We're just beating ourselves.
Instead, if we listen a lot more closely to each customer's specific needs and hand tailor the development and delivery of our products and services to meet those, we will build monumental value into our business relationships. And if we build that value, they will come — and they will pay more, most without hesitation.
Not only must we do a better job adding value into our bids, contracts and business relationships, but we also must raise prices — even and especially in this down economy. Do we want to ride out this storm in row boats or yachts?
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