Scratching your head about how to emerge from the long shadows of your corporate competitors? Simon Baker has some answers.
Don’t give up just yet. When I joined realestate.com.au in 2001, we faced larger competitors and our share price was about to plummet 95 percent. Today, we’ve beaten those competitors and seen our share price soar 7,000 percent from its low point.
How did we do it? By following my time-tested strategy for felling giants. You can insulate yourself from the worst effects of competition against bigger competitors by finding a niche where you can operate profitably without having to battle them over market share or customers.
A niche focus gives you an opportunity to build strengths in areas where the giants are not strong. Even if you remain a small business, if you successfully dominate a niche it will be very hard for anyone to challenge you there.
Your product range is an extension of your niche strategy. Sell only those products or services that have the best long-term value. That means you also must eliminate those products that do not. The core products you should focus on will be those that serve markets with high projected rates of growth, and in which you have a relatively strong competitive advantage.
Think of mobile phones, whose market is expected to increase by a half billion persons for each of the next two years. When Steve Jobs decided to tackle this market, he did so because he can revolutionise it with Apple’s design and technology – which are his competitive advantages. The result, the iPhone, is a revolutionary gadget that has consumers salivating around the world.
Your product strategy has to be based on an intelligent analysis of your customers. You will do best if you make a proactive decision to focus on your core customers and to let the others go. Above all, don’t just let your customers choose you.
Because real estate agents sell more than 90 percent of homes, when realestate.com.au refocused its business in 2001 we decided agents should be our core customers. Unlike some competitors, we don’t allow private sellers to list properties on our site. Serving agencies is our focus and nothing distracts us from that.
Whatever you personally think of its food, McDonald’s has chosen and then relentlessly pursued its core customers: budget eaters. As these customers’ habits have changed for the healthier, the company has made an impressive transition. It has updated its menu with healthier alternatives – so much so that it recently received the National Heart Foundation’s tick of approval for some of its meals.
No matter how well you do in
My company now has 15 websites in eight countries. Another Australian success story, ABC Learning Centres, has expanded its child care operations abroad and now generates most of its $90 million annual revenue growth overseas. Both of our companies were feeble startups not too long ago.
None of these strategies are very complex in theory. Most entrepreneurs already use some of them without realising it. However, almost every business today can benefit from some careful thinking about niches, products, customers and overseas opportunities.
There are 1.1 million full-time small business operators in
