Looking at net profits while neglecting the quality of goods and services, resources and management can be detrimental to your business. Many entrepreneurs who fail to focus on quality find themselves closing shop.

Customers

Poor-quality products and services have a negative impact on customers. Such products and services can cause a business to lose customers faster than they can gain new ones. In a customer driven market, meeting customer expectations and needs is vital to maintaining and improving market share. Superior quality products and services bear a positive effect on market share. Satisfied customers will continue to patronize your products and can even recommend them to other prospective customers.

Employees

Your employees can make or break your business. Having an efficient and highly trained workforce that is ready to serve you and your customers is vital to business success. Quality personnel can pull in more customers, produce more products and work more efficiently. Keeping your employees satisfied, trained and motivated can produce favorable effects such as cost savings and sales increases. Employees who lack training and do not meet quality standards are a big disadvantage to operational efficiency. They can create dissatisfied customers and project a negative company image.

Management

The quality of management a company utilizes to plan, direct and control its resources has a direct impact on its operation. Competent managers can run a business more efficiently than managers who fall below standards. Applying a quality-management system ensures that customer's requirements as well as operational efficiency is achieved. Operational efficiency results in savings in expenses, while customer satisfaction leads to increase in sales. An effective management team can instill excellence for the overall success of the business.

Profitability

Lack of quality in human, financial, physical and knowledge factors needed to perform business processes results in an unfavorable effect on a company's profitability. A loss of market share and a diminishing customer base results in a decrease in sales and an increase in marketing expense. An inefficient workforce translates into low productivity and leads to higher operating or production cost. Lack of quality management can delay or impede progress and cost the company more time and resources to accomplish its goals. The opposite effect can be attained by developing business practices that instill quality in all levels of activity.