To Find Your Next Great Business Idea, Narrow Your Focus
When you’re just starting out in business, narrowing your target market can be difficult for fear you’ll be excluding part of your potential customer base.
But if you can clearly define a market and its needs upfront, you can tailor your product or service offerings narrowly to meet that demand and quickly gain more wallet share than your competitors.
What exactly does this mean?
1. You could be like the enterprising young woman in northern California who discovered a secondhand store’s almost hidden section of distinctive children’s clothes and toys. As it turned out, the store’s owners wanted out of what they saw as a dead-end business. The woman took over the lease and reoriented the entire operation to focus only on children’s products, turning a 1,200-square-foot “dead-end business” into an 800-square-foot startup that was profitable in six months and expanded into a new downtown location.
2. You could be like the mechanic who went through the lengthy and fairly expensive process of getting his auto dealer’s license so he could go to the local car auction to make bids, specifically on older model BMWs. He didn’t want to sell the whole cars, but rather to take them apart and create a line of aftermarket parts for BMW owners and mechanics.
3. You could be like the computer repair technician who decided to strike out on his own in the highly competitive field of information-technology services, only to discover a more specialized market that offered higher rates, more loyal customers and more referral business. That narrow market turned out to be Apple computers.
These examples illustrate a general truth about business opportunity: The true opportunity may not be apparent at the outset. Niches exist in every broad category, and your job as an entrepreneur is to figure out what they are and whether they offer a profitable business opportunity.
Looking at the marketplace this way could also change your thinking on the true nature of a startup. There’s no rule that says you must start from scratch, in your garage or the back bedroom of your house.
Simply walk or drive along any street and you’ll pass any number of businesses struggling to make ends meet because they aren’t selling what their market truly wants or needs. Like the owners of the dead-end secondhand store, they may not even know what their best-selling and highest profit items are -- or that those very specific items are sitting in a neglected section of their store or office.
Category leaders tend to be highly focused, and many times, that focus can appear too narrow. But companies with focus grow precisely because their niche is so distinctive. If you think this applies only to the small retail store or the Macintosh repairman, take a look at what BrandZ, a division of WPP, lists as the 10 most valuable brands in the world:
10. China Mobile
These companies have built their business on a single word: focus. In the case of top-ranked Apple, its greatest success has come from a single product, the iPhone.
So start to expand your focus by doing a more narrow analysis of your market and what people are buying -- or would buy if given the option. Don’t worry about the sales you might be missing by not offering everything to everybody. Your narrow focus could deliver more business than you can handle, producing higher-margin cash flow to enrich your bottom line.