Edition 20 – Competitive Spirit

In early May, 2016, we held our Family Business Budget Breakfast where clients and colleagues gathered to hear about the Federal Budget, and to discuss the three key issues impacting Family Business right now.

Of the many things I loved about our Breakfast, top of the list was the willingness of everyone in attendance to share ideas and talk candidly about their businesses in an open, collaborative forum.

Today, I wanted to relay to you a great example that a client raised at our Breakfast, and how it tied back to one of our topics, Capacity Constraints, which was the subject of Growth, Edition 11.

Our client’s business is best described as operating in the Lifestyle sector. What they sell is a “want” purchase. Not too many people visit their business to buy a “need”.

Business was going well. Sales were ticking over. Customers were happy. Life was good.

But, could it be better?

You see, the business had a sole salesperson. Whilst sales were ticking over, the thought was, there’s only enough business to justify having one salesperson on board.

Most family business owners would accept that concept and remain with the status quo.

Our client is not like most family business owners.

He pondered and asked himself, are we only selling the numbers we are now as that’s all the capacity we have in our pipeline and our level of enquiry?

Or, are we only selling what we are now because there is only one salesperson in the business.

Is that salesperson comfortable in dealing with what they’re presented with, but not truly hungry for what could otherwise be?

So, our client did something that most other family business owners wouldn’t do — he hired a second salesperson.

Most people would question the cost of the new employee. Others would question whether there was really enough business inside the business to keep two people busy.

Not many would think about what type of competitive spirit a second employee might engender into the business.

Which is exactly what happened.

When one salesperson made a sale, it spirited the second salesperson to become hungrier.

People didn’t simply wander into the business anymore.

They were engaged by a salesperson as soon as they entered.

As the spirit of competition built up, sales grew — beyond the previous expected level of “capacity”.

What our client did was create capacity in their business, in terms of recruiting a second salesperson. And then stood back as they watched the sales team fill that capacity — by trying to better each other.

This is a truly great example of releasing the pressure valve created by capacity constraints and how it can lift a family business in terms of revenue, profit, capital value — and competitive spirit.

So, my questions for you to ponder are:

  1. What areas inside of your family business could you tweak up and increase capacity?
  2. If you filled that capacity, what impact would that have in your family business?
  3. If you increase capacity, what would be the bare minimum additional revenue you would need to generate to break even on the investment?
  4. If you increased capacity today, how long would it need for that capacity to generate a return? A new machine might be overnight. A technician might be longer.

This Week’s Tip

Never under estimate the spirit of competition and how it drives individuals, and businesses, to achieve more, faster.

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