You’ve spent months if not years thinking about the idea for your business. You’ve really honed it down and found your unique selling point. You’ve slogged in the evenings and weekends researching the market. You’ve written a detailed business plan. You know exactly what services you’re offering, your methodology and how they reinforce your sphere of expertise.
Then when your first whiff of an actual, paying client comes along, you say yes even though they’ve asked you to do something a little outside your original plan. It’s an irresistible temptation. Especially if you’re a creative thinker (like most start-ups and small business leaders). And especially if you’re focused on generating income (again we all are at this stage of business growth). Every time it happens then the further out the window your carefully honed plan goes.
Suddenly it is a year later and you find that you’ve spread yourself too thin. Your original vision and the value you aimed to provide are not focused on that special sweet spot you had identified at all. Instead you are doing a whole host of things for your customers that you never intended or wanted to. Your margins are slipping and you’re not enjoying it so much. After all, you can’t be an expert at everything. You see your differentiator, based on your original proposition, slowly slipping away.
It’s all too easy to end up in this situation, as turning away income is incredibly hard for any business, but especially for start-ups to do. And it is only natural to act like an ostrich and ignore that fact that the business you’ve dreamed of creating isn’t quite going to plan.
Many business owners hit this point. If or when it happens, it’s time for decisive action. If you don’t address the problem, you risk turning your hard-fought business into a generalist supplier. You lose pricing power in new business pitches and client relationships. You’ll be a do-er rather than a thinker, a strategist or an expert.
If you do find that you have lost your way a little in terms of positioning, you’ve three options:
- Make a step change – re-focus on your original vision. Become the best at it and think about becoming an expert in one particular vertical market too.
- Take a leap – an alternative is to focus on a new service which you’ve discovered in running your business. It may not be your original vision but you’ve found clients need it and you could be great at it with focus.
- Pivot – realising that this is not what you dreamed of, accept that you are in the wrong business and get out! After all, you did this when you first started your business anyway. Find your mojo and do it again. You’ve got it in you!
There’s a raft of information available on re-positioning online and I found the ‘Lean Start-up’ by Eric Ries a great, practical read for driving this sort of test and invest cycle of innovation in my business. For me, making a step change early helped to re-focus and get my plans back on track.
Taking the time away from your business to work on it, not in it, is one of the most worthwhile things I’ve done. It left me feeling re-energised and while this sort of change is never easy, the benefits are enormous. We have happier clients, we are having more fun as a team, and we are making more money. It was definitely the right thing to do for my business and I know it will be for yours too.
Four signs that it’s time to look at your business positioning
1. You’re giving away your thinking for free.
We all know customers have alternatives. But if we’re viewed as one in a sea of many, then we have little power in our relationships with clients and prospects. If you feel compelled to give away your thinking for free in order to win the business then you are not being seen as more of an expert than your competition. It’s time for a rethink.
2. You’re being beaten down on price.
We never discount. We have that rule. But then rules are made to be broken right? Wrong! Look back at business over the past year and check how many times you’ve dropped your price. If customers and prospects are saying that others are ‘cheaper’ then it’s time to ask if you’ve positioned your expertise correctly. Expertise is how you differentiate yourself. Not personality. Not process. Not price.
3. Profit margins are being squeezed.
When profit margins are on a downward trend, small businesses with tight cash flow and thin bank balances can quickly get into trouble. As with the previous warning sign, decreasing margins are a sign that customers don’t see you’re more of an expert than your competitors. Why pay for something that someone else can do just as well for half the price? Getting better at your chosen focus means you can do things faster and remember that time is money.
4. Your services and suppliers are spread too thin.
If you’re working with a lot of suppliers, with lots of activities and resources then then clearly you are offering a wide range of services but are you struggling to keep on top of everything? Use the Business Model Canvas to map how you deliver value to your clients. Getting the best from everyone depends on having a strong relationships and processes. This is hard to do when you’ve too many balls in the air.
Further reading on keeping customers
