Mark Mitchell, in his weekly eletter directed to building materials manufacturers, makes a good point about focus — the need to direct your sales and marketing energies in cohesive, specific and distinctive markets. These can be defined by geography, customer type, and product/service. If you stretch away from your focus, the diversion is costly on several levels. You’ll spend more energy pushing up the hill, while your strongest markets suffer from the diversion.
Mitchell demonstrates the value of focus in his consulting practice. His niche is building materials manufacturers which, when you think about it, is quite a large market but equally one that is absolutely distinctive — and he has set out to “own” that market as a consultant.
We’ve also been reasonably good about our focus, delivering regional publications (magazine and online) for contractors, architects and engineers. Our challenge — should we add more geographical markets or hold the line? Generally, we’ve been most successful in expanding when we discover a customer-driven request; this allows us to (a) satisfy a good client and (b) to take our template and enter the new market with at least some traction behind us.
Another example of customer-driven focus was our decision to launch Ottawa Renovates magazine. This product, certainly at the launch time, didn’t meet any criteria for focus. It is a business-to-consumer publication, and at the time of its launch, we only produced tabloid format newspapers, not magazines.
However one of our better association-related clients insisted — to the point that he sent us confidential data about a competing proposal. (This behaviour would have been highly unethical if I had done anything to encourage the client to provide us the information — instead, the client volunteered the data to effectively tell us ‘Please, bid the job.’) I solved the focus problem by setting up a new business with partners experienced in business-to-consumer publishing — and the separate company has generated healthy profits for a decade.
Hence, some rules of thumb in deciding on expansion initiatives and new markets:
- Are your customers driving the decision;
- Will the new project divert or strain your resources and relationships;
- Would you be better off doing nothing but treating your existing clients and markets with greater respect?
I think you should only move forward with an expansion if your answer to question 1 is “yes”, 2 is “no” and 3 is “yes”. Be wary of losing you focus. It can be truly costly for your business.