5P’s of protecting your business
Years ago, I was in the Army, and I had a sergeant always say “Proper Planning Prevents Poor Performance Private” – of course his version had 6 P’s. The point was clearly made and usually backed up with numerous pushups. The lesson still stands today with the 5P’s.
The funny picture above was an example my son was describing that pushes this thought.
His explanation of the situation was this “dad, you see, the bounty hunters have been celebrating but they didn’t leave someone on watch.” And he continues “so since bounty hunters are disliked by both the good and the bad, they teamed up and are about to ambush them.”
That’s what can happen in our business too.
Too much partying and not enough planning.
Michael Porter, in Competitive Strategy, and strategy genius of the business world, highlights five sources that a buyer can influence our bottom lines (let’s call them the 5-Porter’s) (Porter, 1980):
1. If a “buyer purchases large volumes of your sales work” – they can alter your future.
2. If the products, you sell are similar or standard or “undifferentiated” in the industry.
3. The buyer “faces few switching costs” to purchase your service.
4. Your product is “viewed as unimportant” in the big scheme of the buyer’s organization.
5. And, if “the buyer has full information” of your organization.
The 5-Porter’s may does not have a great alliteration sound however these are the five basics you must control against. The good news is, answering and strategizing with these scenarios in mind can give you a leg up on the battlefield of market share.
So, what can be done?
Unfortunately for the bounty hunters in the picture, sadly not much. But for you, let’s get to work. Below will be an answer sheet to combat this.
1. If your business has all its egg in one basket for profits, start to diversify. In the cleaning industry, margins are tight already so do not just focus on one type of client. Some may say that is too broad of an approach and they are mistaken. Your business may have started with one type of client, and you feel comfortable in that space. Any change could be devastating. For instance, if you run a day care cleaning business then universal pay gets passed by the government, people will be staying home more, and your need goes down.
2. If you are selling a “differentiated” product – watch out. And let’s be honest, most cleaning companies are similar in nature and delivery. Best case scenario finds a significant product that only you create or have a signed manufacturers agreement to be the only customer to use. If everyone is using orbital scrubbers, what will be your difference?
3. Switching costs. This can be a great strategy. As long as the buyer of your service shares some of the burden. Then they have buy-in to make the situation work. Of course, your product must be worth it. If you bear the whole cost of switching from one vendor to you it is no skin for the buyer to drop you.
I would suggest taking the strategy building slow at first with focusing on the above three scenarios. I say this because the problem every business must contend with is the failing social situation. This leads every organization to focus a large amount capital and energy towards culture building. These efforts must have a place in your P/L statement. To leave this off will erode your bottom-line. A later report from Porter says.
“Business is now setting out to address critical societal issues such as those mentioned previously, and serving a broader set of stakeholders, including employees, customers, suppliers, communities, and shareholders. Business has begun to move beyond maximizing profit, to advancing society.” (Porter, The Changing Role of Business in Society, 2021)”
Social agenda building may help keep some employees in the cleaning industry longer if they thought the organization is committed to solving a problem in the world instead of just barely paying a higher wage. Most companies pay a comparable wage, this has been the standard in business for a while. However, does this have to be that way? Is that really working? Only to keep the employees long enough to wait for the next higher paying company. Again, this concern must be represented in your P/L to secure business continuity.
I know, this all sounds great, but we still need to win the bid.
I’m glad that was brought up. If you are happy being comparable and undistinguished, then keep low balling the bids and get the work, then hope to get the reup on the contract later. If not, start to work on a strategy to include the 5P’s in your business day. Shoot me an email and let’s dig out the data and see where the shoring needs to happen. I would also suggest training for all your managers, training that has a follow-up function to make sure your spending has a reasonable ROI.
Bibliography
Porter, M. (1980). Competitive Strategy. New York: The Free Press.
Porter, M. (2021). The Changing Role of Business in Society. Harvard Business School.
