The importance of differentiating your business

Run Your Business Jul 06, 2017

 

Entrepreneurs thrive off challenge. They are bursting with ideas, plans and strategies to turn their vision into a viable business. Many learn early on that even if they have a great idea for a business, they aren’t the only game in town.

Competition is everywhere. There is no shortage of eager and ambitious entrepreneurs offering similar services and products. Many believe the solution to this challenge is to think more creatively, to really dive in and come up with an idea no one else has thought of, something that will take the world by storm.

But many of history’s entrepreneurial giants, such as Henry Ford, Sam Walton and Mark Zuckerberg, didn’t succeed because they invented something brand new. They succeeded because they managed to differentiate their businesses.

Find your niche
Remember the phrase "You can’t please everyone"? In this case, you can’t serve everyone.

From a business standpoint, if you set out to get as many customers as possible, people from all different walks of life and sectors of the economy, you’ll stretch yourself thin.

This is what Dan Moshe, Founder and CEO of the IT consulting firm Tech Guru, found in the early years of running his business. Tech Guru began as IT generalists and prided themselves on an ability to serve a number of companies in any number of industries. 

But stacked up against other, often better established, consulting firms, Moshe knew that to truly succeed, they needed to narrow their focus on a specific industry. He decided his company would target accounting.

Narrowing your customer base allows your company to become expert in a particular field. You get to know what matters most to your customers, understand their challenges and how to face them, and learn how to best serve their needs. 

Instead of being a small fish in a big pond, you become a big fish in a little pond.

Anticipate change
Focusing on a niche market allows you to anticipate change and understand how your business will have to adapt, a major competitive advantage in a rapidly shifting business environment.

A yearly thought experiment Moshe and his team perform focuses on the question: What product or services could a competitor offer your clients that would put you out of business? Their deep understanding of the business landscape allows them to analyze the industry's needs, move forward and create those products and services before a competitor is able.

Hundreds of companies around the country keep their doors open because they are able to innovate. In many cases, this kind of innovation is possible because the company has differentiated itself.

For more information on how to successfully manage your small business, visit usbank.com/smallbusiness.