Be the Best (Fundamentals of Business #1)
Whether you’re thinking about starting a business, in the process of starting a business, or considering a new offering or shifting directions in your current business, you probably have some questions.
From a process perspective, I have some thoughts to share that will equip you to think through relevant issues. Beyond just “thinking through things,” however, this series of posts on fundamentals of business guides you to take focused action.
Read on to find some tools for success.
Historically, there’s been a lot of money to be found in being the one-stop source for many different solutions. The apothecary as both diagnostician and pharmacist! The lawyer who also sells insurance! The American shopping mall!
We live now in an increasingly specialized world. The Internet has allowed consumers to access products and services from providers that are tailored to their specific needs. Expertise has never been so easy to find and access. Being a trusted generalist is diminishing in value. If your field allows a high degree of generalism, you will rapidly find yourself facing crushing competition.
People want to work with the best. If they have a clearly ascertainable alternative that is (or appears to be) better than what you are offering, you have to dramatically reduce your prices to compete. Who wants to reduce their prices? It’s far easier to make money and have a good living by having a smaller group of clients you work with, who truly value what you offer.
This has profound implications on starting a business, or if you are already in business, to continue to be profitable.
The hard truth is, you have to be the best. As mom and dad have hopefully taught us, though, there is always someone who is better at it than you are.
So, you must be the best choice for your client. The key to having the time and resources to expand and be profitable is to limit your competition as much as possible. By offering something specialized and unique, you make it so that there are few direct competitors to your business; their offering will be lesser than yours in at least one area. There are a few key differentiators to consider:
Location - The classic: Be where others aren’t. This isn’t as effective as it used to be, since so much more business is conducted over the Internet, and it’s easy for new businesses to relocate to compete with you. Truly consider, does geography matter for your offering, and if so, articulate the value it brings.
Product - Offer something that people haven’t been exposed to before. Particularly strong for technology companies, this can offer tremendous upside - see Facebook, Amazon, etc. However, this also has the biggest risk of failure. It is not so easy to truly create something new for which there are potential clients. Consider taking a closer look at the pain points in your area of expertise. You might find a way to provide a different method of delivery or package your products and/or services in a way that has not been previously offered.
Industry Focus - Narrow your target audience down to a few specific industry / demographic groups. This allows you to learn more about your target audience, develop specialized solutions and products, and concentrate your marketing efforts on more focused channels.
Before you set out on any new business venture, you have to know where you are going to compete, and how you can make your product, your service - yourself in general - the best of the best at what you’re doing. You want to be so good that people can’t ignore you, so good that, once people work with you, the thought of going elsewhere is repulsive. Find that market space that will let you do that, and you’ll be finding your way towards success.