THE REASON FOR A COMPANY’S EXISTENCE
Many companies out there believe they are in business to make money. Although that may be a by-product of a well-organized business, it is not necessarily a good enough reason to be in business. Actually, many of the best businesses today see profit as nothing more than a reward for providing their target market exceptional value for the product or service they offered. In addition, most of the business failures today can be seen as a direct result of only being concerned about turning a profit versus delivering human value to society.
The best way to tell what is most important to a company is to asks its leaders. Asking questions such as “Why are you in business?” and “What is the enrichment your company brings to market?” are a good start to finding out what really matters to that company. The error many companies make is that they see profits as the end all be all purpose of their organization instead of a reward for correctly adding value to their target market.
The best way to analyze the output of profit is to determine what the inputs were in order to earn a profit. First, the company had to identify a need in the market place that was being unmet or being satisfied less than ideally. Next, the company would decide on who would benefit the most from providing your solution to that problem. Then, the company identifies the best way to approach this market in order to attract leads to their business. This is step one.
Step two is identifying the right way to communicate to their target markets and their leads in such a manner that makes the companies product or service the best choice in adding value to their clients. This is done by creating a sales process that consists of direct questions that are aimed at understanding the client’s situation, determining the right solution for the customer, and then presenting the solution in a manner that shows the customer how their life would be changed for the better is they used your product or service.
Once a sale has been generated, the infrastructure of a company is tested. The first test is how well the company procured the product or service they offer. This is often called the cost of goods sold. Another way to put it is how well the company negotiated supply contracts to make sure the price quoted to the customer is competitive and in line with similar products in the market. Then, the company must allocate expenses for administration, taxes, interest, office space, etc. that it takes to bring that product to market and service that customer after the sale has taken place.
Therefore, the profitability of a company is more a measure of how much value they bring to their target market and how well they procure it versus simply just making money. It is the difference between OK companies and great companies. Just ask the current CEO of Proctor and Gamble and the CEO of Enron.
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