I think spraying and praying has to be one of the worst mistakes new entrepreneurs can make. You know the story… Dale, new business extraordinaire, builds a new widget designed for the real estate industry but soon after sees applications in all sorts of industries ranging from janitorial to precision manufacturing. While it’s always nice for John to think big and outside the box, entrepreneurs trying to serve the masses can easily walk right into failure.
If you can’t keep that ego in check, sorry… you’re screwed
I believe the problem at the core root of things is simply, our ego. Thoughts of financial freedom, living a self-sufficient life, being known, being “the man”, etc. are all are all areas that newbies need to keep in check. You can write up all the business plans you want, have as many advisors around you as possible, but if you can’t keep that ego in check, sorry… you’re screwed.
You need to keep a leash on yourself
What entrepreneurs need to understand is that it’s ok to dream and think of different ways to apply product/service to different industries, but at the same time, you need to keep a leash on yourself. When I have the spare time, I am personally always thinking of new industries that I’d love to be involved with. I have an excel file that I keep these kinds of notes within and when I get close to learning one industry, I move to the next.
Yes, this is a slow approach and in the past 3-4 years, I’ve personally only moved to my second major industry (from automotive to wine). I take things step by step because I have a small business and I don’t have the financial and talent resources to invest into a dedicated R&D team. Not to mention being the sole decision maker at the end of the day means I just want things to run smoothly with as little headache as possible.
Unleash the power of the niche
I think a lot of times new entrepreneurs are scared of developing a product/service around a tightly segmented group because they assume that they will not be successful or get the volume of sales they want. In my honest opinion, that thought process couldn’t be further from the truth. When you tightly focus yourself around a niche or a single vertical, it allows you to fully invest all your resources into developing the best solution possible. You make life much easier when it comes to marketing, PR, and advertising campaigns because you will know specifically the areas you should focus your time and dollars on. You will also have a lot easier of a time building your business and personal brand that you so badly desire.
Do businesses that only do oil changes do poorly? How about those shops which only sell tires/wheels but not do general auto repair? How about specialty gourmet German shops?
Not all industries are built equally
When you focus your business’s resources in a single direction, you have the ability to learn all the quirks, and why things are done a certain way. For example, some online retailers of automotive parts accept credit cards online but don’t allow their payment gateway to automatically charge customer’s credit cards. To the customer, orders may look as they went through but behind the scenes, it’s something different. These etailers use their merchant payment gateways as the first step in fraud prevention and process orders manually. Why? Well unless you observe the industry, and talk to clients, you wouldn’t know that there just happens to be quite a bit of fraud that happens within that particular vertical. Manual processing of high dollar online orders and calling customers to confirm is how businesses within this group save a lot of future headache for a minimal investment of time upfront.
If you were developing an ecommerce solution and wanted to target the automotive industry, pieces of information such as this might be of value but any custom development around this issue may not translate over into other verticals.
The bottom line… divide and conquer
If you truly care about your business and you don’t want to treat it as some kind of money-in-money-out machine, you need to make sure you don’t spread yourself too thin. You want to make sure your business survives for the long haul and your entrepreneurial spirit as well. You need to make sure that you can be there for your clients and customers because you truly care about their success, not because you just want to grab their money and be done with them. The bottom line… divide and conquer. It’s methodological, it reaffirms your success, and at the end of the day, it’s just less headache.
