Here’s the damage you could do to your business if you compromise quality.
Why You Should Resist The Pressure To Lower Your Standards
The ability to maintain your business’s standards is one of the best indicators of long-term success. Business owners can be under pressure to lower their standards for two main reasons: when conditions are abnormally bad or when they’re abnormally good. If revenues and profits are down, some business owners can’t resist the temptation to lower their standards. They believe that things will soon turn around, and they should do whatever they can in the meantime to survive—including lower the quality of their offering. The opposite is also true. If there is a sudden and sustained influx of orders, many business owners don’t want to turn away the additional business. So they cut corners to fulfill the new orders.
This reduction in quality takes shape in many ways, like:
- Purchasing raw material of inferior quality
- Cutting corners on your production methods
- Lowering the quality of your customer service through personnel reductions
- Hiring less experienced workers to save on labor costs
- Changing your traditional terms of sale
While your short-term performance may improve from lowering your standards, the long-term damage to your business could be fatal.
Sabatiello’s restaurant in Stamford, Conn., was faced with a difficult choice. The owner, Sammy Settembre, had previously owned a successful pizza parlor before deciding to trade up and start an upscale restaurant. Despite initial success, the restaurant soon began to experience significant reductions in revenues. Unsure of why his business was suffering, the owner made the decision to begin lowering the quality of meat purchased for the menu. He also began to sell food that was frozen or previously prepared, instead of food that was made fresh daily. In effect, he lowered his standards to save money in the short-term. This became a slippery slope, and soon corners were being cut across many areas of the business. It led to the restaurant’s demise a short while later.
While lowering your standards can in most instances produce a short-term boost to cash flow, it’s only a matter of time before customers start to feel the effects of cheaper products and worsening service.
WCI Communities is a developer of luxury properties headquartered in Bonita Springs, Fla. The company experienced tremendous growth during the real estate boom, achieving peak revenues of $2.6 billion and profits of $186 million as demand for their condominiums soared. During this period the company, like many others, faced a shortage of basic building materials like drywall. Rather than scale back production, the company lowered its standards and began working with subcontractors that sourced their drywall from China.
