Sin number 2 - Not having a focus
By Greg Carroll
This is perhaps one of the biggest challenges for every business. Some businesses that have been around for decades or longer struggle to stay focused. In short they still haven't figured out what it is they actually do, or should be doing. Their purpose, their reason for being. It goes by many names. You may have heard it called Unique Selling Proposition or USP, your point of difference, your brands promise or your hedgehog concept. Whatever you want to call it - it's all the same thing. It's all about having a focus.
Now anywhere you pick up a book on business or go to a business seminar someone is bound to say - "you need to uncover your USP, and if you do that success will be yours". Well that's all well and good but the problem is no one ever tells you how to figure it out, what the heck it is. They quote examples of major corporations and household brands. But these companies have an endless pot of money to throw at communicating their brand's proposition. For most small businesses we need to get across who or what we are in a matter of seconds at a networking function or a phone call.
Because businesses don't understand how to find their USP they end with "our point of difference is our level of service" or "our great prices" or they provide an extensive list of products and services describing everything single thing they do in the hope that something will appeal. These all become pretty meaningless because that's what the business down the road is saying as well
I think the truth for small business is that uncovering their USP is not that hard, and not that much of a mystery. But before we get to that, why is having a USP so important?
A USP keeps you focused. Every day in business you will be presented with situations where someone is offering you a service or product that they say will improve your business. Without a clear focus it can be tempting to take up many of these offers, many which produce little or no result and also take up a lot of your time that could have been spent in more profitable areas. If you have a clear focus for your business then you have an in built tool to critically analyze each of these situations and determine if it fits within your overall strategy. If it doesn't, you can quickly pass it up knowing that your time and money will be better spent in other areas.
Being more focused means fewer resources are wasted in areas that do not fit with your overall strategy.
If you take nothing else away from this book, I urge you to give this area your highest priority. This is the one area that will have the most significant impact on your cash flow.
Having a focus also makes it easier for your customers and potential customers to understand how you can help them. Let's use an example.
Imagine we have two businesses involved in clothing. One business sells clothing for people aged 5 - 55, the other business only sells clothes for kids aged 5 - 13. If I was shopping for children's clothes do you think I might visit the children's clothing store? Would I visit the other store? Maybe, but there's a good chance I will go to the kids store first, so the other store may never get a look in.
This is a pretty simple focus but even before I visit the store I would have built an expectation of what I will find in store. I would expect that they will have a good range of kids clothes, they will be up to date with the latest trends, they will have plenty in stock in the sizes I want, and they will probably have stock at different price points. Now of course the store has to live up to my expectations but the difference is before I have even got there I already have an understanding of how they might help me.
But here's the flip side of this, the store also clearly knows who their customer is - parents. Which means they can be very focused in their marketing by advertising in school newsletters, producing posters or flyers to go up local schools and day care centres, or even sponsoring school fetes or kids' sports clubs. Therefore every dollar they are spending in marketing is not being wasted it is going directly to the people they want to reach.
Because the other businesses customer base is so broad their marketing challenge is much greater and they may find they have to use a shotgun approach in the hope that they hit some of the audience, which will result in a fair amount of wastage.
So how do you figure out what your focus, your USP should be?
Well I'm not going to promise to solve this for you in the next 60 seconds but I think the following questions are a great place to start. If you don't have a business yet then you will need to project what these answers may be.
- What area or areas of your business are the most profitable or have the potential to be the most profitable?
- Of these areas which ones do you currently excel at or believe you have the capability of excelling at now or in the future?
- Of these areas which ones are you passionate about and enjoy or know you would enjoy working in them
- Who are your ideal customers for this area/areas? Where do they live, what do they earn, what are they like to deal with? Note this description may not fit any of your existing customers
- Are there enough of these customers to make your business viable
- Are these customers relatively easy to find or identify? Think of the example above with children's clothing.
So where am I heading with this?
Every business will have a range of products or services that they can offer but usually with every business there will be certain things that they do better than others, or certain areas or customers they enjoy dealing with more than others. By an odd coincidence these areas or customers tend to be the most profitable areas of the business.
I think this is because we tend to perform better in the areas we actually enjoy and are passionate about. If we are passionate about something we tend to know and understand it to a much greater level of depth than other areas. This means we develop a level of expertise in this area. Customers feel this passion and can see your level expertise and connect with it and therefore enjoy dealing with you. And because they place value on this experience may often be prepared to pay more for your product or services because they feel they are dealing with the right person. So it becomes a self fulfilling prophecy.
For a financial planner they might be particularly good at self-managed super funds, an accountant may have a specialty for dealing with the food services industry, a mechanic might specialize in European vehicles.
So like the clothes shop above the advantage of having a focus is you now know what your message is, you clearly know who you want as customers, you also know what they are looking for, what their fears and motivations are. So now you can focus you efforts on pursuing one audience rather than chasing many. It also means you are not competing with everyone else. By focusing you are creating your own market. Over time you also create a reputation for be an expert in this area and others will seek you out.
I think many businesses are fearful of narrowing their focus because they think they will be cutting themselves off from other opportunities. But surprisingly the reverse is true. You not only attract the audience you are aiming for but you will still get other business as well. A financial planner who positions themselves as an expert in self managed super funds will attract this type of business, but that does not prevent the planner offering a range of other products or services, or assisting people who don't need or want a self managed super.
Are you on top of your cash flow?
Are you currently in business or planning to start a business in the near future? Do you have cash flow concerns or want to find ways to improve your cashflow? Are there things you should or could be doing to improve your cash flow now?
To find out simply complete our Cashflow Review Form or complete the form below for an initial interview.
