As a business develops, it can be tempting to look at increasing your range of services. A smart move for some businesses, but it doesn’t work for everyone.
Many businesses would profit by sticking to the old adage that you shouldn't run before you can walk.
“I think early on – the first year or two – the best thing any business can do is to specialise,” says business coach Rebecca Morley, “because then you get to focus really hard on one thing.”
Morley points out that ‘specialising’ – be that in the short term or for the entire life of your business – doesn’t necessarily mean sticking to a single product: it can mean being a force to be reckoned with in a very specific target market, or perhaps in one region. Professor Nelson Phillips, from Imperial College London’s Business School, agrees it can help to think laterally, “It’s distracting to only think of specialising in terms of products because what you need to do is think about what you’re good at, which might actually be a capability to do something really well. What is it that you can become so much better at than everyone else, and that people will pay extra for?”
Specialising and the power of knowledge
According to Philips, in almost every area of today’s economy, specialism is rewarded – and he argues that one of its biggest advantages is it enables you to keep on learning, ensuring that you continue to stay one step ahead of the competition. He points to the example of Honda, which spotted opportunities in adjacent markets and seized them. “It started with motorcycles, but then came outboard motors and other things that needed small, powerful engines,” Nelson explains. “And every time Honda went into a new field it learned a bunch of new stuff that it could take back to its core market.”
Becoming an expert takes commitment. Expand your knowledge by connecting with people who are doing similar things, suggests Phillips, and then let the world know of your expertise by drawing customers to reviews about your business online. Winning awards, he says, is a great way to show customers that you outshine your competitors. Morley, meanwhile, throws free promotional channels like Facebook Live, YouTube, LinkedIn and Instagram Stories into the mix. “It’s all about engaging with your audience, asking them questions and involving them,” she says.
Target advertising to reach your market
Finding niche audiences has never been easier. Daniel Shaw, co-founder of Encore Digital Media, says the rise and adoption of advertising technology (ad tech) has reduced the wastage that was seen when SMEs simply placed ads in magazines that were the best fit for their target market. “The campaign can now be refined and honed so it only addresses the audience you know you want to reach,” he says. “Knowing your product is potentially of interest to only 1% of the adult population doesn’t make it commercially unviable.”
Also, says Morley, a highly targeted approach can help keep your business relatively headache free. “It simplifies everything,” she says, “and that can give you a huge advantage in terms of how everything runs. The simpler you can make your business, the fewer the conversations with suppliers, the lower your costs, the more profitable you can be.”
There may come a day when the only way you can grow is to break through your self-imposed glass ceiling and move into new areas, but it’s not likely to happen overnight. In fact, it’s taken Preston-based card-services and risk-management company Suresite – specialist in all things related to the petrol station forecourt – almost 25 years to get to that point. “We’d come a long way,” says sales and marketing director Keith Bevan, “but we were effectively a big fish in a relatively small pond.”
“After 16 years, we were so convinced by the power of our niche that we rebranded to reflect our specialism – and it’s only ever put us ahead of the competitors”
Mike Richards, CEO and founder, The Treasury Recruitment Company
Accordingly, Suresite decided last year to start marketing the expertise it had gleaned beyond the forecourt – and it now feels the sky’s the limit. “But we’ll never forget our roots,” says Bevan, “and we’ve ring-fenced our core business to make sure we remain at the top of our game in the forecourt sector.”
Four specialists, four questions
1. What’s the best thing about specialising?
Agatha Chapman-Poole, a PR in the food and drink sector, says: “It’s the ability to act quickly. Clients often demand quick results which can only be achieved at optimum quality if we’re already knowledgeable about the sector and we already have the right contacts.”
2. How has specialising helped your business to succeed?
Mike Richards, CEO and founder of The Treasury Recruitment Company, says: “We’ve had many opportunities to diversify, but being one-inch wide and a mile deep means we can share our knowledge, expertise and experience in a way that competitors can’t. After 16 years, we were so convinced by the power of our niche that we rebranded to reflect our specialism – and it’s only ever put us ahead of the competitors.”
3. How have you resisted the temptation to expand?
Charles Fawcett, founder of Land Rover re-engineering firm Twisted Automotive, says: “There have been a number of times over the past few years when diversification would have been seen as the sensible option. My issue with diversification is dilution. We are absolutely focused on one product and that enables every single person in this business to learn everything about it and be the best we can be.”
4. What’s your top tip for staying ahead of the generalists?
Holly Andrews, MD at specialist bridging finance firm KIS Finance, says: “It’s important that your customers have confidence in you. They will probably require a more in-depth service than your main competitors can provide, so make sure you can deliver.”