As the internet and new business tools continue to tear down barriers to entry in many industries, business owners everywhere are experiencing increased competition and noise. And while much of the competition poses little threats, there are always one or two companies that seem to emerge from the shadows and successfully steal clients.
What can modern businesses do to remain competitive?
Is Specialization the Answer?
Pick an industry and examine the landscape. Chances are, there’s a lot of disruption happening at this very moment. New technology, changing viewpoints and evolving economic factors are all playing a part.
“When you take a look at the Fortune 1000 over the last 40 years, starting from 1973 you see that major changes have taken place,” says Rufus Franck, founder of Consultants 500. “By 1983, one-third of these companies have fallen off the list. By 2013, only 30% of the original companies are still on the list. This pace of change will continue to increase as only a third of today’s major companies are expected to survive the next 25 years.”
This is a sobering look at the future but should serve as a wake-up call for business owners and entrepreneurs everywhere. If Fortune 1000 organizations – companies with major resources and leading innovations – will struggle to hold on over the next quarter of a century, where does that leave your (likely smaller) company?
Well, it should leave you searching for a solution. You need an answer to increased competition and rapid evolution. And that’s why so many businesses are turning to specialization.
“The effects of specialization is such a broad concept that it touches upon almost everything in our daily life,” Franck admits. “And our natural urge for specialization is also one of the main reasons why professional services exist. Society and businesses cannot know everything and therefore need specialists with practical experience to help and guide us.”
While you may not be mentally prepared at the moment to consider shifting away from your generalized focus and stepping out on a leap of faith to pursue specialization, it’s something that you’ll need to consider in the coming months and years.
Five Benefits of Specializing
Why should you specialize? Let’s say things are going great and business is booming. Doesn’t it make sense to maintain the status quo and reap the rewards of a thriving business?
Maintaining the status quo will benefit you for a period of time, but it actually won’t work for very long. From Amazon and Walmart to Netflix and Apple, even the world’s most successful organizations are forced to shift with the ebbs and flows of the marketplace.
Currently, the marketplace is clearly showing that it rewards businesses that cut out the fluff and specialize on providing valuable services.
Here are a few of the specific benefits associated with specialization:
1. Better Value Proposition
When you specialize, you’re able to provide your target market with a superior value proposition over companies that generalize in a related field. You essentially become a bigger fish in a smaller pond, as opposed to the other way around.
“By specializing, you become an expert in a specific field,” digital strategist Paul Boag says. “This narrows down how many other companies can compete with you for that specialist work. Furthermore, you are able to offer services that are not replicated by automated tools or that justify being a permanent part of an in-house team.”
2. Smaller Learning Curve
There’s a lot that goes into running a successful business including staying up to date on new trends, best practices, and developments. If you’re in an industry where innovation happens at a swift pace – such as in medicine or IT – then you’re all-too familiar with this challenge.
By specializing, you can lighten your load by reducing the learning curve. When you’re only focused on one or two niches, you’ll find it easier to focus your time and attention. This results in better comprehension and expertise.
3. Higher Perception of Authority
If you have a brain tumor, who do you perceive as being more authoritative and knowledgeable – a general surgeon or a cranial neurologist specializing in the diagnosis and treatment of spinal cord tumors? That’s obviously a rhetorical question. The individual with the specialty is viewed as authoritative.
When your business decides to specialize, it automatically garners a higher perception of authority in the marketplace. This can allow you to charge more, while also accepting fewer clients.
4. Higher Conversions
Generally speaking, specialization leads to higher conversions. For example, let’s say that a customer is searching online for a company to remove a virus that’s infiltrated her computer. In her search, she sees four different company names:
- Computer Repair Services
- Quick Computer Repair
- PC Repair and Maintenance
- PC Virus Removal Services
While all four may be able to help the customer remove the virus from her computer, it’s the fourth company that’s more appealing. As a result, this company attracts more customers and produces higher conversions.
5. Better Networking
Finally, specialization leads to better networking opportunities. This is simply a result of the circles your business runs in. When you specialize, you’ll see an uptick in word of mouth marketing (assuming you produce a high-quality product or service). You’ll also discover that you’re interacting with people and organizations that are closely related to your specialty. This means you’re more likely to strike up profitable relationships.
How to Find Your Specialty
The reality is that specialization is often a natural byproduct of regular business operations. In other words, you’ll naturally discover little niches where your business could benefit from specializing. Rarely is it something where you just say, “I want to specialize in this.”
“If you’re regularly working in the same industry sector or on the same problem, same narrow problem all the time, you’re going to develop a lot of experience and expertise in that particular area,” business consultant Ian Brodie says. “Obviously, don’t neglect outside knowledge and experience, because that’s often where big breakthroughs come from. But by working in the same field again and again, you can become an expert in that field pretty quickly.”
Here are a few examples of natural evolutions in specialization:
- Real estate agent to buyers agent
- General auto mechanic shop to quick oil change shop
- Business consultant to marketing consultant
In almost all of these situations, the business (or professional) was already doing what they ultimately ended up specializing in. It was through this broad experience that they were able to learn enough to specialize.
Consider Your Options
Nobody’s predicting that your business is about to go downhill and crash; however, if the statistic that two-thirds of major companies will fail in the next 25 years is true, then you need to be looking for ways to modernize.
Clearly, one of the best things you can do is specialize your business and focus on providing value for your customers and clients. It’s much more rare that a specialized business in a thriving industry fails than a general business in a stagnant one.
This article was written by Larry Alton from Forbes and was legally licensed through the NewsCred publisher network.