Hold It . . . Hold It . . .
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Wall Street traders tell countless tales of businesses that strayed from their core areas of expertise-only to see their profits erode and stock prices plummet. Companies large and small fall prey to the desire for innovation at all costs, and sometimes they lose their equilibrium in the process. As your business becomes increasingly successful, you may feel pressure to add additional products or services, find new and untapped markets, or reinvent your company image. But before you make that next big move, consider how the following three steps can save your business from sliding down the slippery slope:
1. Focus on your core product or service. Imagine you're a talented ceramic designer whose firm makes high-end tableware. Your dishes and serving pieces are sold in fine shops from Manhattan to Los Angeles. Should you expand by creating additional products for the table, such as vases or flatware with ceramic handles, or branch out and create ceramic light fixtures for use elsewhere in the home?
The answer will depend on the size of your business, the strength of your brand name, your marketing muscle and your budget. When you add a new product or service that's marketed through the same channels and is consistent with the image you've established for your "brand," you minimize your marketing investment. You also add a new profit center while enhancing sales of your existing products or services. In the example of your ceramic design company, you could add vases or ceramic-handled flatware to your line of unique dishes and sell them to your existing customer base through the same shops. But to manufacture and sell light fixtures, your firm would have to develop an entirely new distribution network of lighting stores and invest in extending your brand name into the new market-a decidedly riskier move.
2. Focus on your best prospects. Do you have a clear picture of your best clients or customers? If not, it's time to refocus your marketing efforts to consistently reach out to your most qualified prospects. Entrepreneurs often take on too many target markets-trying to be all things to all people-by marketing to businesses in a range of categories or to all types of consumers, from kids to seniors. This can result in low response rates to direct marketing and other forms of advertising, and prospect meetings that fall flat.
To succeed, create a profile of your best prospects and direct all your marketing efforts toward them. Let's say you've created a business accounting software program. Instead of advertising it to businesses of all types and sizes in general business publications, it would be more cost-effective to identify your best vertical markets (such as law firms or medical practices) and reach them through trade publications, targeted direct mail, trade shows and sales tactics.
3. Focus on a single message. As your business grows and you run new ad campaigns and expand into new arenas, your marketing message might become diffused. Where once you had a single slogan or marketing message built on a central theme, now your materials and sales staff might communicate a variety of messages. It's time to regain your focus. Everything that's read, seen or heard about your company must be based on a single, unified message, so that each new impression builds positively on the last.
Create a statement of benefits that answers a prospect's question, "What's in it for me?" Then make this benefit statement the central theme of all your marketing materials and sales efforts. Use it as a starting point for your company brochure, weave it into the final paragraph of your press releases, and use it to introduce your company when you and your staff are networking. This will position your business effectively and strengthen your company image.
By staying focused on your core market, your best prospects and your message, you'll sidestep the pitfalls entrepreneurs fall prey to and increase the success of your growing company.