Entrepreneurs by nature are big dreamers. This is a good thing, but every entrepreneur must learn to discipline his/her thought process.
BUSINESS MISTAKE NO 2: GOING BROAD VS GOING NICHE
A common mistake entrepreneurs make when they open a business is to get carried away by their big dreams, and then try to provide a very broad range of services right from the start.
Assume you open a supermarket in a town that already has a ShopRite, and you dream of being the next ShopRite, and so you use the limited cash you have and try to stock a wide variety of products just like Shoprite. What are the chances of your success? Very slim.
A better strategy will be to find a profitable niche, and focus on it. You may decide to focus on “Babies” products. Now people will still go to ShopRite, but because you are focused on just babies, they are more likely to visit your store anytime they wish to buy just babies products.
When starting a business, finding and focusing on a profitable niche market, will greatly increase your chances of survival and success.
These are some of the reasons why it is better to focus on a niche instead of going broad.
- You will make better use of your capital.
By focusing on a single niche, your limited fund will be enough for you, and you will be less likely to run out of funds. A lot of young entrepreneurs are desperately looking for funds, simply because they are trying to do a lot of things from the start, with the erroneous belief that starting big will give them certain advantages. Narrowing your focus will let you manage the limited funds you have, more effectively.
- You will satisfy your customers more.
A dedicated wine shop will better satisfy a wine connoisseur. A dedicated babies shop will better satisfy a new mother. A bridal shop will better satisfy an intending couple more than a general market.
By finding and focusing on a niche, you can easily carve out a market for yourself, and satisfy your customers better.
- You will avoid stiff competition.
When you are starting out in business, you do not need stiff competition. Finding and focusing on a niche, will ensure that you avoid stiff competition. A dedicated babies shop, can survive and even thrive, near a ShopRite, but a general supermarket will face stiff competition if sited close to ShopRite.
- It is easier and less expensive to market your product and services.
When you are serving a well-defined niche, Marketing is easier, cheaper and more targeted. Take the example of the babies shop, the owner does not need to place expensive Tv adverts, she simply has to tailor the advert and identify the location of her target audience. This may be the maternity section of hospitals, ante-natal wards, and anywhere that expecting mothers frequent. Even when you do a mass advert, the message is more targeted. It is also easier to describe what you do, and pass the message across.
When you walk down a street, You can easily identify amateur businesses, their billboard usually has a long list of products and services they render. This simply says that they are Jack of all trade and master of none.
Assume you are taking someone for a delicate eye surgery, will you go to a doctor, whose billboard reads: Cardiologist, Gynecologist, optician, Dentist, veterinary and general medicine, or will you go to one that just reads Consultant Optician? Same in business, sometimes less is more.
As you succeed and gain more capacity and experience, you can gradually expand your offerings. A typical example is AMAZON. They started as just an online bookstore, gradually becoming bigger and bigger, until they became the biggest online bookstore, and then they started introducing other products one after the other, till they became the largest online store in the world.
Your niche can be based on a variety of things that narrow down the interests of your potential customers. And this isn’t necessarily just the products you carry or services you offer. It could be:
- The area you operate in or sell to(local, national, specific countries…)
- The audience or customersyou’re targeting (specific ages, interests…)
- The price pointof your goods (designer, affordable, budget-friendly…)
- The way you go about selling or offering your products/services(via subscription, with a membership option, home delivery…)
Finally, starting small doesn’t mean you have to remain small. As you succeed, and gain more experience, expertise and capacity, you can expand as you see fit.
So when starting out, go for “NICHE” not “BROAD”.
Have a blessed day !
Make Sure to check tomorrow for the next lesson.
If you missed Business Mistake No 1 Click here to read it.