Smart Ways You Can Gain A Competitive Advantage
Many businesses face heavy competition. In order to succeed, you need to find a way to gain an advantage. If you can operate more efficiently or ramp up your marketing efforts, you may be able to outperform the competition. Use these tips to succeed in a crowded marketplace.
Integrate your software applications
Enterprise resource planning (ERP) is a type of business software. An ERP system integrates data from each department within your business. By using one system for most of your business activity, you can collect and manage data from every department more efficiently. If you can analyze data faster, you can make business decisions quickly.
Using an ERP system can offer you these benefits:
- Analysis: You need data from many different departments to make business decisions. Say, for example, that you're trying to determine how much of a discount you should offer customers who pay within 10 days. You need to consider how much revenue you'll lose and how quickly you'll collect cash. An ERP system allows you to access information from your sales area and your accounting department using the same system.
- Training and tech support: If everyone in your organization uses a single ERP system, it's becomes much more efficient to train your staff. You'll use one set of manuals and a single training system. Using one system also makes tech support easier. Your IT staff does not have to learn and troubleshoot issues with different software packages. An integrated system can reduce your training and support costs.
- Increase productivity: An ERP system can reduce the time it takes to perform many tasks. Consider your process for billing clients. The sales area needs to notify the accounting department of a sale. Accounting generates an invoice that is emailed to the client and included in the customer's shipment. Your bookkeeper notifies accounting when the invoice is paid. The ERP system helps each of these departments communicate and share data faster.
These are all great reasons consider an ERP system.
Finding an ERP vendor
Implementing an ERP system can be a huge expense. Converting from many different software applications into a single ERP system is time-consuming. It's critical that you think through the erp software selection process.
Here are some considerations for choosing an ERP vendor:
- Experience: You need a vendor that can manage the implementation of your ERP software. If the vendor isn't experienced, your conversion may be delayed. Delays can affect your ability to do business.
- Ability to customize: No ERP system is perfectly suited for your business. You need to understand how closely the system can be customized to meet your needs. The easier it is to customize the software, the more useful it will be.
- Scalable: Once you implement the ERP system, how well can it handle your business growth? If you double your sales in the next 3 years, can the ERP system handle the additional workload? You need a system that is scalable.
Consider each of these points when you're looking for an ERP vendor.
Create a written procedures manual
As your sales grow, your business becomes more complicated. You'll have to send more invoices, post more accounting transactions and ship more products.
To stay on top of your business, consider creating a written procedures manual. The manual should document every routine task your staff performs. If you have a system for taking goods out of your warehouse and shipping the purchased items to a customer, document the entire process.
Writing the procedures manual forces you to clarify each step of the process. The completed manual clears up any confusion about the task you perform. You can keep the manual stored on the cloud and use it as a training tool.
Use content marketing
People increasingly use a web search to find solutions to problems. They may want to educate themselves on a topic, or simply buy a product to solve a problem.
You can use content marketing to solve problems for potential customers and build a relationship. If you post useful blogs and articles on your site, you can develop a reputation as an expert. When a client needs to buy a product or service, they may think of you first.
Google now ranks content as a more important factor for search rankings. If you consistently post interesting content, you can increase your search ranking. Moving up in the rankings will help you get noticed.
Find an underserved market
Many businesses succeed by finding an underserved market, or an area where customers are not being served at all. Uber, for example, found that using technology could better serve customers who needed rides in a given city. Uber succeeds by doing a better job of serving the customer.
Adapt to change quickly
Adapting to change is similar to a race car driver finding open room to drive on a racetrack. One way to adapt to rapid growth, for example, is to find tech tools to streamline your business process. By adapting to change, you can remain competitive in your industry.
Learn from your mistakes
If a certain product launch doesn't work out, learn from your mistake and apply what you learn to your business. One way to do this is to test products. Pick a small segment of your market and see what the interest level is in your product. Use that feedback to make changes and improve your results.
Use financial ratios to judge outcomes
Every industry has certain benchmarks that are important. You may track how long it takes to fill a customer order, or how many contacts it takes your salespeople to close a sale.
Management should also look at financial benchmarks to judge the company's success. Here are some financial ratios you can use to evaluate your business:
- Profit margin: For every dollar you sell, what is the profit that you earn? If you earn a $1 profit on a $10 hammer, for example, your profit margin is ($1 / $10), or 10%. Management wants to increase their profit margin.
- Inventory turnover: How quickly do you sell your inventory? Management's goal is to minimize that amount of inventory needed to fill customer orders. Inventory turnover is stated as (Cost of sales) / (Average inventory for the period). You want your turnover rate to be as high as possible. A high turnover rate means that you can carry less inventory and still fill customer orders.
- Sales vs. accounts receivable: Management wants to grow sales without a big increase in accounts receivable. If you can grow sales and collect more sales in cash, you don't need as much cash to operate.
Monitor each of these financial ratios to monitor your business. Competing for business can be challenging. Try all of these strategies to compete for business and grow your sales.