4 Internal Factors That Make a Business More Competitive

4 Internal Factors That Make a Business More Competitive

By: Jeffrey Heybruck
Updated May 2022

Business-as-usual often means focusing on external factors such as growing sales or expanding outward facing products and services. But the secret for a stronger, more competitive business may reside within the business itself. Consider the following four internal business areas to develop strength and improve processes that lead to a competitive edge.

Internal Competitive Business Strategies


People are at the core of all factors that give businesses a competitive advantage: productivity, innovation, quality, and service, to name a few. Having the right people in the right seats gives business leadership confidence to focus strategically, knowing that all parts of the business are in good hands.

Key to a business achieving this level of confidence in its employees is establishing and ensuring that employees share and live out a set of core values. Why? This empowers employees to make more day-to-day decisions that leadership knows will represent the business well without having to micro-manage.

Confirming shared values is easier said than done. One word core values, for example, may mean something to one employee and something else to leadership. It is important to expand upon core values and discuss them with both new hires and employees to ensure alignment. At Lucrum, we realized one of our employees had a different interpretation from leadership when asked what our core value of Quality meant. I went home and asked my wife what she thought it meant and she shared the employees’ interpretation. My own wife! We quickly set a meeting to discuss with employees, giving them an opportunity to weigh in, and gained alignment. Now our core values are sentences that we summarize with one word. See below:

  1. Do It Right the First time (Quality) –
  2. Exceed Expectations (Value) –
  3. Commit & Execute (Integrity) –
  4. Be the Solution (Solution) –
  5. Stronger Together (Team)

Tangible outcomes of focusing on people include better employee retention and increased employee productivity. Both lead to considerable cost savings via business continuity, giving a competitive advantage. The business will likely spend less on recruiting and hiring, increase customer retention, and potentially even less on salaries and bonuses – where employees find value in other benefits such as an employee-friendly company culture, flexibility, recognition or acts of appreciation. That being said, some employees will still just want that recognition to show up in their paycheck. Heck, it seems that lately letting folks work from home is the biggest factor in employee decisions. This holds especially true in an employee’s market where entry level jobs pay never-before seen rates. Good leadership will understand each team member’s motivations and reward or compensate them appropriately.

Less turnover in the business also has a direct impact on client satisfaction. Consider a client that has had the same service team for 5 years or longer. The institutional knowledge the team carries with that client enables efficiencies and a pace of innovation that may not be possible without the shared history.

Internal Systems

Internal systems and technology, when effectively deployed and adopted, can drive a considerable competitive edge. A company with well-documented processes and procedures has an inherent advantage due to the efficiency of knowing what works, what doesn’t and not having to reinvent the wheel. This is especially true with turnover or growth; the new team members already have a plan to follow that has been proven to work.

Accounting Systems, HR systems, Marketing and CRM systems allow management and business leadership to track the right metrics to see what is working and profitable vs. what is not; and move more resources towards activities that generate results.

Internal systems equip and free management via visibility into accurate data. A good manager, working in any part of the business, should have access to the right data to allow them investigate and understand what’s happening, despite not being involved with each actual event. The numbers and metrics should tell the story so that the right decisions can be made to drive profitability.

Just this week a client told me that he had to cover a Project Manager’s role when he suddenly quit. The client’s solution was to get two assistant PM’s to go to all the job sites and take pictures and upload them to their internal portal. In real time, the client was able to review the pictures, ask questions via phone, get the assistant to speak to the crews on speaker, and knowledgeably communicate with his customer as if he’d spent all the time driving around. Sure it was a workaround but with good systems turnover can be handled and it had the side effect of training two capable but green assistant managers.

As the above story illustrates, formalized systems also equip management to speed new employee onboarding, since there is a playbook to shortcut the learning curve. This allows businesses to flex easier to keep up with workforce growth and changes.

Lastly, systems and technology, especially when integrated, can drive competitive efficiencies via automating otherwise manual tasks. Lucrum has one client making great use of a POS system that integrated well with Quickbooks. This system saved them manual 14 manual journal entries in the general ledger per day, or months of data entry time every year. Another example is a client that converted a pricing spreadsheet into an application. What started out as a simple pricing model in Excel grew to one on an iPad, and is now a full-fledged homegrown ERP system that integrates with their Quickbooks Enterprise accounting system.

When considering a new system or upgrade, make sure that the functionally of the system expands to meet the growing data demands of mature businesses. Also check that the system, especially accounting systems, can be integrated with the business’ other systems to control costs and improve margins while increase the flexibility of reporting and access to data.

Skill Sets

As businesses grow and market conditions change, the right skill sets drive the business. Performing an audit of skills important to the current and future growth of the company and evaluating the current strength of each will help to avoid a skills gap.

That being said, knowing the skill sets the business needs today might not necessarily mean knowing the skills sets the business will need tomorrow. More than one-third of desired skill sets for occupations today are comprised of skills that are not yet considered crucial to the job today. That’s because the rapid pace of technology means that skill sets needed today might look quite different in just a few years. We’ve all seen the tech dinosaur in the company- we’ll call him “Bob”. Bob is the guy that writes in all CAPS because he doesn’t like to wear his glasses, has an assistant help him with his Excel expense reports, and would rather fax than scan & email. The point here is don’t hire folks who are likely to become Bob in the near future.

This puts an increased importance on training and “upskilling” for a business’ existing workforce. Additionally, addressing missing skills sets via outside contractors or consultants can be another way to quickly fill gaps and avoid negatively impacting a business’ success.

Skills sets may include hard skills like financial forecasting, accounting, recruiting, and HR management, in addition to soft skills like leadership and useful personality traits. One soft skill that Lucrum has seen as especially valuable is ‘relatability.’ Some individuals are just easier to relate to and have better relationship building skills, which is especially valuable for success in Account Management, Sales or Recruiting. Just as training is available for hard skills, there are online resources for soft skills as well. For example, Charisma on Command.

Fully understanding an employee’s skill set not only ensures that business’ skills gaps are filled, it also means these individuals can be incentivized to increase productivity, improve service and spur innovation. Good managers should design process and compensation structures to ensure employees are motivated to act to their strengths.

Client and Prospect Interactions

It matters how companies present themselves to the world, specifically to clients and prospects. In fact, 95% of global consumers say that the way a company treats them is important to their brand loyalty. Businesses should consider every interaction point as a place to gain a competitive edge. The primary ways customers interact with a brand will differ by industry, but, to name a few, consider the business’: storefront, website, customer service platform, phone interactions, email, social media, in-person meetings and tradeshows.

The old adage that a happy customer tells one person, an unhappy one tells a dozen rings true. At Lucrum, we’ve found that it’s often not the issue of a mistake or bad experience, but rather how that issue was handled that impacts loyalty. In fact, some of Lucrum’s best clients came out of initial failures or client dissatisfaction. But that took repairing the relationship via a well-communicated action plan to make things right. This meant making real change to the service offering and having real dialogue.

Businesses that recite contract language and push back without listening to the customer can quickly lead to lost relationships and ex-customers who don’t hesitate to share their poor experience. Ignoring bad reviews, failing to stick to customer promises, or other short sighted decisions can tarnish business reputation. We’ve told our clients many times, “if we have to debate the legal language, we’ve already lost the customer”. Personally, I can’t stand businesses that make me pay for X more months just so I can cancel services. That either makes me less likely to work with them in the first place or doubly sure I will never do so again. And tell everyone I know not to as well.

Real dialogue and communication are especially important in an economy rocked by supply chain issues. Understanding what each side expects is key. If the supplier doesn’t have the product, a customer demanding quick delivery is going to get old quickly.. Lucrum has seen business’ taking the approach of making offers vs. asking for deals or accommodations. “If I do XYZ (pay in advance, guarantee # of units, etc), what can you do for me with ABC (price, shipping terms, payment terms, etc)?” This makes for real dialogue and protects the relationship by asking for what is reasonable and doable vs. making demands. Plus it gives both parties feedback as to what is important to the other side.

To track the quality of customer service and interactions, seek feedback regularly. There are different types of feedback to collect including long term relational, transactional and short term relational. Long term relational feedback (typically calculated using a global standard called the NPS score) looks at the overall long-term customer satisfaction or loyalty to the brand. Transactional feedback is typically collected after a customer support interaction or customer service interaction and looks at how quickly a business is able to resolve issues or concerns. Short term relational feedback measures customer satisfaction at a point in time – typically related to a specific event, such as the completion of a project, implementation of a solution or a regular cadence (annual or bi-annual most likely) based on the type of service or product.

Paying attention to internal company details makes a difference in the external world of customers, prospects and competitors. Commit to tackling one area at a time, and strengthen the business’ competitive advantage.

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