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Major corporations like Ford, Nike and Samsung thrive by offering multiple product lines and varied service offerings. For small businesses, however, this strategy can lead to disaster.
By zeroing in on a single product, service or niche market, small businesses can concentrate on opportunities that allow them to capitalize on their core strengths.
“Since committing to a narrow area of expertise, our average per-customer value has increased significantly,” said Owen Fuller, president at Fit Marketing. “We have much stronger credibility in the areas where we’d like to stand out. Hiring has never been better, and we have an easier time finding partnerships.”
The decision to specialize can initially be a tough and costly decision. Here is what small business owners can learn from Fit’s experience:
When Fuller launched Utah-based Fit Marketing in 2009, his vision was to build a company that could tackle any and all marketing challenges.
“At the beginning, it was just me, and I had a wide variety of skills to bring to the table,” he said. “I led a range of initiatives from online advertising to even radio and print.”
This model allowed Fit to grow and put Fuller in a position to hire his first employees. By 2013, his staff had grown to 14 full-time team members.
However, Fuller felt that something needed to change. While clients were happy with his work, he believed that his company would have an easier time scaling with a set of targeted services. So he went back to the drawing board and looked hard at what Fit was offering and how its areas of expertise could best fit the needs of the market.
Ultimately, Fuller and his business partner decided to focus Fit around a core set of strengths. Soon, Fit became a dedicated inbound marketing agency.
“Inbound marketing is a focused subset of marketing with a clearly defined set of tactics and success path,” Fuller explained. “Focus allows our business to be the absolute best in this very focused area.”
The decision to focus can be challenging. Business owners need to be comfortable with saying “no” to opportunities that fall outside of their specialty, and letting go of existing revenue streams. When income starts shrinking and teams undergo change, it’s tempting for business owners to second-guess their choices and revert back to their original plans.
“It took us a year to make the full transition,” said Fuller. “We knew we were making the right decision, but the process was painful. We voluntarily sacrificed quite a bit of revenue, and for the first time in our company’s history, we experienced significant turnover.”
Despite their doubts, Fuller and his leadership team remained committed to their plan, hoping the dip in Fit’s revenue would eventually right itself.
“We stuck with our decision and pushed through some of our business’s toughest months. And now, we’ve hit a plateau. January 2014 was the best sales month that we’ve ever had.”
Even though Fit has committed itself to inbound marketing, Fuller is already thinking about ways that the firm could refine its focus even more.
“It’s hard to walk through that door of specialization because it means turning down work or not doing things that you like doing,” he said. “And then you come to another door.”
But rather than limiting Fit’s opportunities, narrowing its specialization has only boosted his team’s existing expertise.
“Our first few months as an inbound marketing agency have revealed our unique strengths within that industry,” he said. “We are looking at specific industries in which we’ve had success as well as particular processes.”
At the end of the day, the challenges Fit faced in refining its service offerings have paid off. The lessons that Fuller and his team learned along the way have strengthened their resolve and made them even more optimistic about the future.
“We believe we’ll make a stronger impact by becoming the best in one specific area,” he said.
Ritika Puri specializes in business, marketing, entrepreneurship and tech. She writes for American Express OPEN Forum, Forbes, Investopedia, Business Insider, CMO, the SAP Innovation Blog, and others.
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