The $100 college title for what a business does is “core competency”. Every business that gets off the ground has one or more competencies that are at the heart of what they do. Most businesses that fail forget what those competencies are. What we are talking about is an identity crisis in your business. The rules are simple; know your business, know your customer, know your people.
When you set out on that exciting and dangerous adventure that is business ownership, the first question that should be asked is, “What can I bring to market that customers need or want?” Not surprisingly, the first question asked is one that should be revisited EVERY time a business thinks of adding or expanding. An owner of an espresso shop might easily add bought in pastry to his/her product mix; that same owner would do well to pause before carving out a full kitchen on premise or trying to sell DVD’s.
Knowing your customer means respecting your customer and not taking them for granted. Success in business is achieved when your customers learn to count on the consistency with which you deliver a specific product or service. It is important to limit the offering of products or services that you may not be capable of offering consitently. That bought in pastry could be a great item, but running out of stock or changing makers often can have a debilitating effect on your customers. When thinking off adding a product or service, consider the following:
- Does this addition complement what my business does currently, or does it satisfy a concurrent need for my customers?
- Is the potential product or service something that can be added without detracting from my firms core mission?
- How much will it cost to add the product or service in terms of facilities, training, and base cost? Do these costs fit within the framework that the market will bear in terms of retail price?
- Is this better, or just more?
Large retail operations face few obstacles when adding products. Your neighborhood mega-mart probably contains around 30,000 unique items and may cycle (add and subtract from the mix) 2%-5% of those per month. Very few of the employees will be affected by the coming and going of individual products. For the small business owner, it is important to recognize the effect that a change in routine can have on their staff. You should know the strengths and weaknesses of your people, and understand how the new item or service will effect them. Ultimately, it is your people that carry your vision to your customers; if they get the message wrong, your customers will belong to someone else.
Successful businesses constantly self-assess by asking whether they are following the simple rules; do we know the business, do we know our customers, and do we know our people? The trick is not being afraid to give a straight answer to those questions. Know your core competencies and communicate them them relentlessly to your people. Your customers will thank you.