Tweet

When Does the Foundation Become an Anchor

Written by: Dale Furtwengler

Article Overview: When do the products and services you offer switch from being the foundation of your success to an anchor that prevents you from moving forward?

When Does the Foundation Become an Anchor





The very products and services upon which you built your business may be keeping you from increasing your company's profits. This transition from foundation of success to anchor is gradual. What should show up as changing consumer preferences are often overlooked simply because you are not getting the information you need to spot these trends in their early stages.

The companies that identify changing trends early and redirect their efforts accordingly normally experience two advantages over their competitors, (1) they achieve higher margins because demand outstrips supply and (2) they gain market share from their competitors.

Let's look at how most businesses respond if they aren't one of the early arrivals. First they spend more money on marketing trying to retain market share, but it doesn't work. . Their next response is to lower prices. Now, the company is spending more on marketing to get sales at lower prices. Profits take the old one-two punch, (1) on higher marketing costs and (2) lower profits from reduced prices. It doesn't take a rocket scientist to see how great the advantage is to those who monitor changing trends. What, then, should we be monitoring?

PROFITABILITY AND MIX

Here are a few of the items you should monitor:

• Profitability by product line or service category

• Changes in the mix of products/services the customers purchase

• Profitability of each of your customers

• Changes in profitability and sales mix of the various regions served

• The size of the overall market for your offerings

Unfortunately, too few businesses have the systems necessary to provide this information. It is even more unfortunate when you consider the wide array of reasonably priced software packages that allow you to have this information at your fingertips 24 hours a day. But access to information isn't enough. You need to combine these financial statistics with customer meetings specifically designed to identify not only their needs, but THEIR customer's needs as well.

MISSED OPPORTUNITIES

All too often business owners bemoan the fact that they had an opportunity for new business but they didn't have the production capacity or financial resources available to take advantage of that opportunity. Here's a way to avoid that dilemma!

If you know how profitable each of your current offerings are and a new product comes along with better profit potential, you can eliminate a low-margin line and add the new, higher-margin offering.

Similarly, you can replace a low-margin customer (normally they are also the most demanding and least fun to work with) with customers whose purchase mix include more of your high-margin items. In both instances, profit improvement comes with minimal investment in production capacity and little, if any, increase in overhead costs. Usually these changes in your business do not require new funding; they can be financed through current operations.

Don't let your foundation become an anchor! Monitor and adapt to changing the changing profitability of your offerings and customers. Then reap tremendous rewards with little, if any, new financial commitment.

Copyright © 1997, Dale Furtwengler, all rights reserved

Related Articles
  Anchor Text, How Important is it Anyway?
  What is Anchor Text and Why Should I Use It?
  Using Anchor Text to Increase Website Traffic
  How to Increase Your Link Building Success
  What Does Google Look for in Links?

Article Tags: anchor, consumer preferences, margins, market share, marketing, money, nbsp, profits, punch, rocket scientist, size medium, span style, style font, times new roman, transition



Related Forum Posts
Re: Quick Ways To Utilize SEO Effectively - Great tips, Jeff. The key here is creating unique content. As far as your questions; I'm not sure about the first one. Anchor text is the text that is hyperlinked to a web page, or the text that is "clickable." Anchor text is vital because it is what determines what pages get ranked high depending on the number of occurrences there are for those pages.
Re: Quick Ways To Utilize SEO Effectively - There are many different types of content: blog content, website content, newsletter content, audio & video content, the list can be endless. I'll just list 10 types of website content here: * Index/Introduction * Product Descriptions * Testimonials * Reviews * Resources * How-to Information * Downloads * Contact Information * Navigation/Site Map About/Company Info Anchor text as the others have said is the hyperlinked words on a web page - the words you click on when you click a link. Anchor text is important because it tells the search engines what the page is about. Used wisely, it boosts your rankings in search engines, especially in Google.If you use "click here" as the words people are going to click on, you're telling people the page is about the subject "click here", which is not the phrase you want to rank highly for, the text you need to use is a keyword that you have chosen for your website, blog or article. Take care, Carol
Re: How to Promote Your Blog – The Definitive Guide to Promoting - Great Post! Dont forget to put your blog in Anchor Text For SEO purposes for the keywords you want when getting backlinks (for example with article marketing)...Very important. You can conquer quite a few small Niches and get your site on the number 1 spot in Google!
Re: Quick Ways To Utilize SEO Effectively - [quote="Carol Aston":fybrn2qt]There are many different types of content: blog content, website content, newsletter content, audio & video content, the list can be endless. I'll just list 10 types of website content here: * Index/Introduction * Product Descriptions * Testimonials * Reviews * Resources * How-to Information * Downloads * Contact Information * Navigation/Site Map About/Company Info Anchor text as the others have said is the hyperlinked words on a web page - the words you click on when you click a link. Anchor text is important because it tells the search engines what the page is about. Used wisely, it boosts your rankings in search engines, especially in Google.If you use "click here" as the words people are going to click on, you're telling people the page is about the subject "click here", which is not the phrase you want to rank highly for, the text you need to use is a keyword that you have chosen for your website, blog or article. Take care, Carol[/quote:fybrn2qt] This is a great topic and useful to anyone who runs a business on the internet. Carol as always your advice is excellent. As far as I know, it is important to use your main keywords as anchor text which lead back to your website or blog, because that is ultimately where you want your readers to go. MichelleJ
Re: How to Promote Your Blog – The Definitive Guide to Promoting - [quote="T.J.":3s4z9eh8]Great Post! Dont forget to put your blog in Anchor Text For SEO purposes for the keywords you want when getting backlinks (for example with article marketing)...Very important. You can conquer quite a few small Niches and get your site on the number 1 spot in Google![/quote:3s4z9eh8] Using the anchor text for your chosen keywords is important for every link you create, internally and externally. Alan


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Ways to Improve Your Landing Page Conversions

Angel Investors Where Are You?

How To Become A Member of the Paparazzi

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.