Someone sent me this blog a while ago on looking for opportunities in the market. I found it interesting so I wanted to share it in full for you to read now, and then I’ll add my 2c at the end:
A typical startup journey is to create one product that corners a specific niche, ie
- Amazon started with books
- Craigslist with local events for tech people in San Francisco
- Proctor and Gamble with soap
- eBay with small collectables (early Pez dispenser collectors loved eBay!)
After cornering a market, the company then expands by a/ offering new products to widen their target market or b/ creating more products for their current customers. For example:
- Amazon expanded to CDs… and then everything
- Craigslist to apartment listings… and then all types of classified
- Proctor and Gamble to Crisco, toothpaste, and all types of foods and personal hygiene products
- eBay to electronics, travel products, and all used goods
When starting a company, your early customers are like your firstborn child. You love them. Nurture them. They have 100% of your attention. The novelty of having that first baby is just so exciting!
But then you have a daughter. And two more sons. And now you’ve got a full family. And maybe you start letting the youngest child get away with things the oldest didn’t get. The strings are a bit looser.
As companies grow, it is easier to neglect certain customers and product lines.
And this, my friend, is where your opportunity is.
You can build a mighty big business by focusing on the fast-growing, highly engaged areas of big companies – areas that are too small to move the needle for the big company.
This is what I call unbundling.
In all but a few cases, verticals within a broad, horizontal company break. They become victims of their own success. This is the evolution of business. And often, the company that unbundles them.
The secret is to find segments within that company that are growing fast yet are too small for the big company to care about.
So, where will you start?
It was a good blog, right?! It was essentially about businesses that start with a good idea but then grow big and diversify away from their original offering, leaving that niche wide open for you to pay some attention to. Sometimes you can spot these services or products by musing on “When was the last time they innovated with this product? Are they using the latest technology? Are they lagging behind with development? Could they do with a rebrand and refresh? How’s the customer service?” Your answers will soon tell you if the product or service has been neglected and needs some TLC — and then you can decide whether it’s a market worth playing in.
I wanted to raise a similar point but from a different angle: as a business owner, which of your original offerings are you neglecting? Do you need to remember to stick to your knitting and show the thing that got you where you are today some love? Have you been sidetracked and forgotten to give your first love the attention it deserves? I have one client who was really excited about a new related business opportunity and spent all her time and energy on it – then down the line she realised her funds weren’t looking too good… The new business was doing ok but was still fledging, but by neglecting her initial successful business, it ceased to do as well, so she hurridly needed to show it some love again. New business ventures can be good, but never forget the golden egg.
Or likewise, which of your original or early offerings are no longer working for you? What services or products have you kept offering but really probably shouldn’t? Maybe they’re time-consuming, maybe they don’t reflect your target customers anymore, maybe you’ve outgrown them, maybe they’re not worth the effort? Unless you’re keeping them as a sense of tradition because of the goodwill it brings from your clients, it’s worth taking the time to determine if they should still be part of the stable or if you should cease offering them. If it’s the latter, could you sell it off as a standalone business?
And another angle: sometimes, in the business of doing business, we pick up other areas of revenue – almost by accident but in the pursuit of streamlining operations. For example, if you hire cars and maintain them yourself, you might end up having an in-house mechanic – and then a full-service garage for the public. If you are in real estate and you start printing your own for sale signs, you might end up printing signs for all the local agencies. Diversification can be great if it’s worth more than what your original core offering is, but you need to ask yourself: is it worth us doing this? If we were doing a business plan, would this revenue stream be one we would have chosen to do? Does it dilute our focus elsewhere?
When former Zespri CEO Tony Marks joined our Business Changing TAP talk at the start of the year, he shared a story that related to this. When he took over Carter Holt Building Supplies, he found the Hawke’s Bay division had 2 dozen forklifts. He was told that instead of leasing forklifts, they’d decided to buy and service them themselves – then other forklift owners noticed and started asking them to look after and service their machine. The team were pretty rapt with this sideline business they’d built up, but Tony made an unpopular but practical call: “Sorry guys, we’re in the building supplies market, not the forklift market.”
Take a courageous look at what you offer. What needs to go, what needs more focus, what is worth the time and resourcing, and what isn’t?