When I was 17 I started selling computer hardware to local businesses. When I was 23 I opened my first retail location. In the first 2 years we expanded into bigger retail space two times and opened two other locations. Business was good! There was only one reason we were doing well and it was price.
Our service was average at best, because we were completely cost sensitive the quality of our parts was average as well, and we hired the cheapest labor we could find. We succeeded largely because of my ability to speak Mandarin Chinese and obtain lower prices on virtually everything compared with my local competitors. We had an advantage that other local companies didn’t have and so it was easy to “win”. We could sell almost $10 million a year worth of computer hardware and not worry about the competition catching up. In Dec 2006 the last of the retail stores that I started called “Computer Warehouse” shut down. I had sold these stores off in 1997 or so, but it was still sad to see my baby that I had worked so hard on finally fade into the sunset.
Fast forward to December 2003 and Bluehost is just starting up. I have learned a lot since then. The first thing I learned is that a perceived advantage that you have in business will eventually go away or be negated in some fashion. Whether its price, a great search engine ranking, a low workforce cost, etc, it doesn’t matter. Your advantage will go away at some point either because competition catches up or the environment you are operating in changes.
Sound business practices and a REAL commitment to the customer is what will weather the storm when it comes to your small or large business, and it WILL come. Cost for labor, hardware, etc is enormously important, but if your business model relies on you being only the cheapest one out there then your days are numbered.
Matt Heaton / Bluehost