[Author: Andrew Goodman, 09.2016 | Keywords: Executive Insight, Business, Management]
As businesses continue to grow, the importance of competent, effective management will increase. Management education and skill requirements will also grow as society and technology become more advanced.
Experience has shown that three distinct areas of management can affect the overall performance and profitability of a business. The first area is marketing. It is vital to know and understand your customers’ needs and to carry or develop products that meet those needs. Knowing your customers’ wants and needs takes both research and a clear understanding of your customer base.
The next area is product knowledge. Developing or finding products and understanding their application and the product support necessary remains crucial. This area is often supported by the manufacturer.
The final area is infrastructure. This includes, but is not limited to facilities, tools, accounting, IT, human resources and compliance issues.
Keep in mind that no area is more important than another. Equal weight should be given to balancing marketing, product and infrastructure. A good way to evaluate your business is to review and score each of these items using the following checklist.
The process starts and ends with marketing. First, identify your customers’ needs, which will ultimately drive all of the other items.
Second, select the products and provide the necessary customer support. This involves knowing how to select and deal with manufacturers, which can be the most challenging part of the process.
While the third area, infrastructure, is just as important as marketing and products, it often is seen as secondary. Infrastructure includes ten essential checklist items:
- Financial knowledge and capability. You must have the capital and a good understanding of financial reports.
- Hiring the right people.
- Bricks and mortar.
- Insurance and risk management.
- Compliance with regulations (safety, environmental, legal, etc.).
- Employee training.
- Employee benefits.
- Computer operations.
- Reading and understanding contracts.
- Protecting against fraud and theft.
Note that the checklist both starts and ends with marketing. While products must be effectively merchandised to the customer through display, verbal, written and electronic communication, an important part of marketing is the support the sales, parts, service and administration departments provide back to the customer as well.
“IT IS CRITICAL TO EMPLOY INDIVIDUALS IN YOUR BUSINESS ORGANIZATION WITH EXPERTISE IN EACH OF THESE
DISTINCT AREAS. THE MOST SUCCESSFUL BUSINESS MANAGERS AND/OR CEOs HAVE AT LEAST A GOOD WORKING UNDERSTANDING OF ALL THREE AREAS.”
It is also important to recognize that one area is no more important than the other two areas and that success and profitability are enhanced by all three working well together.
Sometimes, you may have capable people in an organization who understand all three areas. Most of the time, however, you will have people who perform well but are only interested or skilled in one or two of the areas promoted into higher positions. The most common example is the very successful technician who is promoted to service manager only to discover later that this person does not have the social skills in the marketing arena to deal with customers and promote the product.
The importance of capable management increases as businesses continue to grow in size. There may be instances where organizations need to look outside to gain the management expertise and balance to take their businesses to the next level. Success and profitability not only require good business savvy, but balance in the three areas of product, marketing and infrastructure as well.
About the Author
Andy has worked in the equipment industry for 47 years; 22 of those leading I-NEDA. His extensive knowledge and experience helps Andy guide our members through dealer-manufacturer relationships, complicated mergers and acquisitions, and legislative issues. When he’s not working, Andy enjoys riding his motorcycle, fishing, model railroading and spending time with his wife and grandchildren.