Why It Pays To Be Narrow Minded In Business

Yaro … great post. Every time I see a business go into different categories or expand it’s line of products that now target different consumers I smell fear and loss.

What makes a business do this? Either they are greedy or they’re close to going out of business.

“We sell everything”! …… I don’t need everything. I guess I’ll go to the guy who sells what I want.

Take doctors for example. If you need a cardiologist you won’t go to a physician who tells you that he is knowledgeable in heart disease.

Doctors are forced to choose their specialization and thus they do. Business owners are their own bosses and no one can tell them what to do, you know what I mean?

Companies get paid for excellence. This is the number one message that all companies, new and old, should take more seriously than they currently do. Peter Lynch called it di-worsification. Focus, and commitment to pushing value for your customers out better than anyone else is what you get paid for in the long run.

Hi Igor – thanks, but this is not my work, this is Brad’s post and he deserves your praise.

Hi Yaro, thanks for the article. Good to see SBB lively again with all these new posts.

I don’t agree with the point on pricing and stockholding.

Cheap is one option for building a brand, but if possible ‘expensive’ is a better way to go. Sell an experience rather then the product, and your margin will thank you.

If you’re selling low cost goods, obviously you need a very high turnover to make a decent profit (and have cash to expand). The risk as I see it, is that many small businesses are undercapitalised and have limited reach in terms of their potential sales. Taking the ‘cheap’ option may doom them to ‘limbo’ . ie not enough cash to move forward, but due to limited size of the immediate market they never achieve a high enough turnover to generate enough free cash for growth, marketing, and upkeep of their assets.

Meanwhile, they plow all their excess cash into additional and excessive inventory, pushing up storage costs, stock management costs (loss/spoilage), and reducing their liquidity.

I’ve also noticed that many SMEs that focus on ‘cheap’ end up including ’sloppy’ as a sub text to their brand. Its something about the ‘cheap’ mentality that causes them to pinch pennies from the wrong areas within their business, degrading service, and ultimately the customer’s experience.

Cheers
Hugh

Gah, sorry! I just realised that Brad wrote this one.

Thanks Brad for your article

I misread the comments. I gotta brush up on my reading skillz.

Hello Hugh!

(Haha! No worries about directing your comment at Yaro instead of me. He’s done a good job at branding himself here, and deserves to be the assumed writer by mistake every once in a while!)

Good points ya made my friend! Every one of your thoughts are right on the money. It would be incredibly difficult to get a startup business’s feet off the ground if they brought in too much inventory and then tried to sell it cheaply to a budding group of customers.

However, for the sake of this article, I’m speaking on how to create a MONSTER of a brand (I apologize for not being more clear on this). If you’re to be the most dominant brand within a product category, you must be the best at EVERYTHING – which includes pricing. So buying in bulk, and selling cheaply in bulk, is going to be the way to go if you are going to be your industry’s most popular brand.

Yes, I wrote an article that pertains to a company that already has experienced a significant amount of success – And yes, I realize that this is a blog about “Small Business Branding”… BUT, sometimes us small timers need to think like the big timers in order to satisfy our ultimate ambitions – WHICH IS TO BE A BIG TIMER!

Wishing You Continued Success…

-bizMAVERICK-
Yaro Starak

I mean…

-bizMAVERICK-
Brad Williamson

Brad this was interesting. It helps to look at branding from every conceivable viewpoint.

Hmm, I’ve read some of this — the post by Brad Williamson — before in a business book somewhere; However, I don’t have the name handy.

“If you’re to be the most dominant brand within a product category, you must be the best at EVERYTHING – which includes pricing. So buying in bulk, and selling cheaply in bulk, is going to be the way to go if you are going to be your industry’s most popular brand.” – Brad Williamson

Yeah, look at Costco, Sam’s Club, etc; somewhat different area of business but same type of business model.

Great article Brad! Staying narrowly focused not only makes you the go to company for your service/product, but, it also allows you to focus on making your product/service the best out there! This ensures continued success in your niche market.

It’s kind of the issue with Microsoft, they have all types of products and yet, their main product (Windows) still has MAJOR security issues!

[...] And The Best Antivirus Is… A good comparison of several of the leading anti-virus packages available today. One thing to remember is that it’s not only definitions that count, but also heuristics (the ability to detect viruses not yet defined or even seen)! [...]

Hi Brad,
This post is great, and the comments stimulating. I’m a Canadian ESL teacher in Mexico City, and I’m in the middle of starting up my own English teaching company. Here’s what I’m wondering:

Do you think I’m going “too narrow” or maybe just getting the concept of narrow niches wrong, if I were to tell you that I wanted to only work with folks who were at an intermediate or advanced level of English?

I do my best work with people at these two levels. When I delve into the lower language level classes, I get bogged down, and feel like it’s just not….ME. I can do it…but it’s just doesn’t fit as well as the more advanced levels. Does this make sense?

Do you think I’m going too narrow? Got the concept totally wrong?

Hey Aaron! Thanks for the praise – I appreciate it!

Devil’s Advocate here… And please remember, I don’t completely understand your industry so my comments could be completely off base. I apologize if they are.

Your approach concerns me a just a little bit. I’m scared that you are going to hurt your brand a bit by turning away the beginning english speakers who need your services the most. These are people who could potentially provide you with lots of referrals. If they feel neglected, they will eventually get others to neglect YOU. The last thing you want to do is upset your word of mouth advertisers (Which is probably a valuable source of new client leads in your particular industry).

Can you hire someone to service the beginners? Can you develop a beginners course that new customers must take to prove their genuine interest in learning your one on one material? Surely the students who follow through with your beginner course would be more tolerable to teach to because they are obviously committed to learning the material.

Those might be stupid ideas, and I’m sorry if they are – but I really think you need to find a way to include that valuable segment of potential clients.

Wishing You Continued Success…

bizMAVERICK-
Brad Williamson