What is your market and who is your customer? Don’t tell me everyone! Someone once asked Willie Sutton, the famous American bank robber, why he robbed banks. His answer was very insightful. “Because that’s where they keep the money.” A danger is to not know where the money is kept. Are you guilty of selling or servicing every customer with no real knowledge if it is a profitable sale or not? When was the last time you did a careful screening of your sales to decide which customers should be dropped?
Some companies think any sale is a good sale. That is simply not so. You may be robbing a convenience store after-hours instead of a bank on payday. It’s hard to turn down an order when your people are not busy or your machines are idle. The normal justification for marginal to nonprofitable sales is to exercise the equipment, keep the plant running, and pay for overhead. Well, that has a downside, too. I’m not suggesting you turn down work or turn away orders. What I am suggesting is that you look at work to see if it is profitable.
Define your market and, specifically, who is and who is not your customer. The latter is just as important as the former. When EZCertify.com developed its business plan, the management focused like a laser on this issue. After careful market analysis they determined exactly who they were attempting to reach with their product. By first defining the market and then the profile of the actual customer within that market they were able to develop realistic annual targets. Without this information your operational planning targets are going to be guesses at best and badly skewed.