Many small business owners who are just starting out, and even many of those who have established reputations in their communities built over a number of years, may find themselves occasionally looking for ways to gain an edge in their local markets. Unfortunately, many entrepreneurs know that this simply isn’t as easy as creating a great new product or service and immediately finding a niche market for it.
However, there’s something that many companies may be able to do that’s sort of along those lines: Focusing on one area, according to a column from the small business expert Rhonda Abrams. While many small businesses try to be all things to the people or companies to which they cater, becoming a little more focused on one area in particular may actually help them to increase business for a number of reasons. Of course, it might take a little bit of research on the part of owners or other small business executives to see exactly which of their products or services does the best in terms of generating profits, but that time spent will likely lead to far better conditions overall.
For example, suppose there’s a company that sells all sorts of industrial cleaning devices. While power washers and floor waxers might sell well enough, if a company tends to move a larger number of vacuums, it might be wise to look into why. Talking with customers about the reasons they’ve purchased these products and what they like and dislike about them might inform future decisions, and allow the small business in question to start branching out and creating a wider variety of vacuums that might appeal to other companies with more specific needs.
Why this helps
There are a number of reasons why specialization can help to take small businesses to the next level, the report said. For one thing, it allows companies to rise above the kind of price-slashing competition that often proliferates among small businesses in packed markets, because they can charge slightly more for something in an area in which they are known to have an expertise. Because customers or clients will know the company as one that knows all about industrial-quality vacuums, and makes the best ones available, for example, they will be willing to pay more for such a products, in general. In addition, if companies are able to successfully grow into a well-known specializer in their given market, they may then be able to expand their reach into other areas and carry with them an established reputation.
However, many companies are actually adverse to this kind of move toward specialization because they fear that it will cut into their bottom lines, the report said. Not everyone needs vacuums, and therefore focusing on just those that do could in theory limit their potential customer bases. However, setting sights on being as broad as possible as a means of reaching more people might make a company look indecisive or as though they’re not really specializing in very much at all, and that can be a turnoff for some prospective customers or clients.
Further, companies that have specializations also get to enjoy the benefits of having more specific marketing plans, the report said. Instead of trying to appeal to many people, narrowing that market means that such efforts can be far more focused and potentially more effective.
Owners trying to shore up their finances ahead of such efforts to move toward specializing in a smaller number of goods or services may want to look at all their options for cutting costs, including finding more affordable small business insurance coverage. Lower-cost liability insurance, or other policies, can save companies thousands of dollars or more per year.