Friendly Competition Makes for Greater Profits!
Like many business owners, I served on the state board of the industry my company served. I got to know most of my competitors, some of the suppliers, and a few of our legislators as well. We would discuss the industry and our own concerns regarding government changes, the economy, and pressures on the labor force. One of the most valuable parts of this experience was the cooperative relationships we developed between each other.
For example, one day I received a phone call from Bill, the owner of my largest wholesale distributor. Bill asked if I had a certain item in inventory. I answered that I did. He then asked if I would drop it off at my competition an hour north of my location. Bill’s warehouse was two hours south of my building so this trip would have been a three-hour one-way drive for his trucks. He said he would replace the inventory item on my next delivery from him. I said I would and promised we would deliver the item by the end of that day. When I told my foreman what I wanted his driver to do, he looked at me as if I was “collaborating with the enemy!” He asked, “Why would you do that?” I explained how creating a good relationship with both the distributor and the competition was a very valuable position to be in and would benefit our company in the long run.
The industry we were operating in did most everything by RFP’s (requests for proposals) and any job the competitor had we most likely also had a chance to bid on. If we did not get the job it must have been because the competition underbid us, making the job unattractive for our company, in that case letting our competition have a less profitable job was a good thing. I explained to my managers during a management meeting how this type of decision benefits our business as Bill knows we have his back and, in the future, I would expect, Bill will have ours.
In all the years I have been in business I have learned that; “people do business with people they like!” We can do business with most anyone we chose and as we have a choice, we do business with people we like and trust. These relationships don’t happen overnight but when we achieve this status with other business owners, it will benefit the bottom line of our company. Truth be told, Bill and I enjoyed a close business relationship, often talking with each other years after I sold that business.
As The Boss, one of your main jobs is to drive profitability for you as the owner, your employees as stakeholders in the business, and your investors as creditors in the venture. I often say, “back in the 1980s and 1990s and even in the early 2000’s we could make money by accident!” Back then The Boss didn’t have to be so strategic in his thinking but today as Thomas Freidman states, “The world is flat!” and we are all operating in a global economy. The Boss will need every advantage to succeed. Getting to know your competition, joining state boards and other industry organizations, and being The Boss that others want to do business with, can greatly benefit your reputation and increase the bottom line of your company, ultimately improving your owner’s equity.