When you are presented with a bit of a different kind of opportunity – like a big order for something that isn’t your expertise, but is technically possible for you to do – it is tempting to just say “yes” when it could make you a lot of money. And if the contract was going to give you a serious profit, why would you not say yes, right?
Keeping From Going Into The Red
Let’s say you run a catering company and are meeting with a prospective client who promises you your next big order. For the past few years you have made a name for your company catering for corporate functions. You have a team of about 10 chefs and waiters specialising in savoury finger food. It has been a slow winter with not too many functions to cater for, but now you are meeting with a couple about catering their wedding for about 100 people. You are used to catering for that number but this wedding is a sit-down affair, and what’s more, they want you to do dessert as well.
You have not done this before. You would need to change your entire menu and train your waiters in table service. However, business has been slow with only 4 functions to cater for in the past 3 weeks and only 2 more booked for the next month. So even though it will require a change, you probably think that you need to take the job in order to keep the business from going into the red. It seems like the best option to just say “yes” and get on with it. I would not blame you – but I also would not think that that is a good idea.
Why Your Niche Is Important
In business, especially if you are planning to eventually sell your business, establishing your niche can be one of the best ways to establish a stable and long-term profitable business. When you niche, you become amazing at what you do – and become an “expert”. When you are positioned as an expert, people find it easy to remember and recommend you for what you do. People will find it easy to describe your business when it is well defined. If you offer more generic services, people are less likely to immediately think of you when they hear of a job opportunity that you might be good at.
Going back to the catering company, if you have been doing stand-up corporate functions for years and are then given a networking event for 150 professionals eating finger food, you know exactly what you are doing. You know what food is best served when, and your waiters have been trained to know exactly when to present food and how to present it so that the attendees are impressed with the catering quality. Your processes are in place so it will be a piece of cake, pardon the pun. You know how to do this, and you know how to do this well. Your reputation will get a boost and the host and attendees are now likely to recommend you on to others for catering other similar events.
However, if you take on the wedding job, you are taking a massive risk on your reputation. The processes you have been using so far will need to change and your staff retrained in a whole new way of serving food. You cannot be confident of the outcome, no matter how much you trust your chefs and waiters to do their very best. In any industry, word travels fast and a botched job can easily become a black mark that travels with you and could be lethal to the future of your business.
Turn Down The Job To Establish Your Expertise
When you turn down the jobs that do not fit your processes or niche you will start to be recognised as a provider for that niche. When that happens, you will start to get more recommendations and a growing reputation from which you can build your business – and a reputation that will drive up the value of your company should you eventually wish to sell the business.
While some entrepreneurs find the idea of sticking to a specialisation constraining, if you are looking to create a business that can perform and grow without you, it is really important to become great at that one thing.
The bottom line is to choose a niche and stick to it – no matter how “big” the order outside your niche may be. Short-term gain may not be good for the long-term end goal.
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