Don't be everything to everyone
In order to thrive it is not enough to survive but grow. But a growth strategy doesn't necessarily have to be a high risk strategy. Too many business owners embark on an unnecessarily dangerous journey by trying to be everything to everyone.
A highly esteemed business professor at Harvard by the name of Michael Porter expressed the view that there are only two ways a business can gain a competitive advantage.
One way is to differentiate. The other way is by being a low-cost producer. By low-cost, Michael Porter wasn't talking about discounting. To be a low-cost producer a business needs to be able to source key components of their product or service at a price that their competitors can't match.
This allows the business to maintain a viable margin and therefore be able to compete profitably. Both of these views are in themselves interesting strategies that we will cover in more detail in the future.
However it is interesting to compare these ideas with common methods adopted by a significant number of small businesses.
One errant but all-too-common strategy is to try to be all things to all people.
From a high level this type of strategy does make sense. It's all about creating more customers and a sure fire way of doing that is to create more products and services to encourage them to buy.
This also increases the demands on the business to support and provide knowledge on these additions.
Another downside is that customers may start to see your business as something of a general store rather than a business that has carefully selected what it does and how it does it better than anyone else.
In some cases, the customer will account for this perceived risk (real or not) by devaluing the price of the product and perhaps the value of your brand as well.
There are a number of ways to successfully grow a business. We can help you determine the pathway that will work best for your business.
A highly esteemed business professor at Harvard by the name of Michael Porter expressed the view that there are only two ways a business can gain a competitive advantage.
One way is to differentiate. The other way is by being a low-cost producer. By low-cost, Michael Porter wasn't talking about discounting. To be a low-cost producer a business needs to be able to source key components of their product or service at a price that their competitors can't match.
This allows the business to maintain a viable margin and therefore be able to compete profitably. Both of these views are in themselves interesting strategies that we will cover in more detail in the future.
However it is interesting to compare these ideas with common methods adopted by a significant number of small businesses.
One errant but all-too-common strategy is to try to be all things to all people.
From a high level this type of strategy does make sense. It's all about creating more customers and a sure fire way of doing that is to create more products and services to encourage them to buy.
This also increases the demands on the business to support and provide knowledge on these additions.
Another downside is that customers may start to see your business as something of a general store rather than a business that has carefully selected what it does and how it does it better than anyone else.
In some cases, the customer will account for this perceived risk (real or not) by devaluing the price of the product and perhaps the value of your brand as well.
There are a number of ways to successfully grow a business. We can help you determine the pathway that will work best for your business.