One of the most important issues facing entrepreneurs and small business owners today is how to GROW their companies. This is the focus of my consulting practice, my weekly radio show, my web site and my sales and marketing classes.
Achieving sustained and profitable growth is extremely difficult without having at last one strong and differentiated core business on which to build. The need for a strong core business to support a growth strategy requires defining both what a business IS and what it is NOT.This is true for small companies as well as large ones. Even as a very small organization, Dell Computer Company established its market differentiation and eventual industry leadership by recognizing the potential for “direct selling” rather than the VAR (value added reseller) distribution channel typical for the computer industry. Today, 35% of computers are sold direct to consumers and Dell now dominates this channel.Often times companies stray from their core business in pursuit of other adjacent opportunities. This can be motivated by industry turbulence, downward price pressure or specific market demands. Take the ophthalmic giant, Bausch and Lomb. Throughout the mid-1980s they leveraged their hold on the market by creating a new technology that made soft contact lenses affordable. The result was an astounding 40% market share. Competitors began attacking their position with newer technologies. Bausch and Lomb responded by diverting their attention from their core business into other adjacent products such as electric tooth brushes, skin ointments, and hearing aids. They developed no obvious linkage to their core lens business and as a result lost their dominance and eventually declined to only 16% market share.It is important to define your core business in its clearest terms. It should be defined as that set of products, capabilities, customers, distribution channels and geographies that embody the essence of what your company is or aspires to be in order to GROW revenue in a sustained, profitable fashion.I know that’s a mouthful. But let’s break it down using my company as an example.My little company offers the following CORE PRODUCTS:
- Business consulting
- Advertising services
- Training classes
- Management coaching
- Marketing planning
Our CORE CAPABILITIES include:
- Creating change from the “Inside-Out” – – Working directly with small business owners to gain the willing cooperation of their staff to establish systems, set goals, measure progress and improve performance.
- Creating change from the “Outside-In” – – – Establishing a unique position in the market for the company, develop product/service differentiation, and strong brand value and client response.
Our CORE CUSTOMERS are entrepreneurs and small business ownersOur CORE DISTRIBUTION CHANNELS are our exclusive Internet-based Virtual Consulting Sessions. group training classes, business development programs and one-on-one coaching and consulting.Our CORE GEOGRAPHY is Southern California.Using this as an example, begin to define your CORE STRATEGY. If you are interested in learning more about core business strategy development, enroll in our new class, “Out-Marketing the Competition.”