American Business Brokers - September 2019

American Business Brokers & Advisor Founder & President PROFESSIONAL INTERMEDIARY & MARKET MAKER FOR PRIVATELY HELD COMPANIES Advisor • Consultant • Speaker Market Valuations Involved in Closing 500+Business Transactions & Over $500 Million Author of ‘The Art of Buying and Selling a Convenience Store’

SEPTEMBER 2019

WWW.TERRYMONROE.COM

800.805.9575

Niches Lead to Riches

“I’ve heard it said that there are riches in niches. When a business specializes in producing a few goods or services really well, ideally without much competition in the market, they tend to be successful.”

2 Pitfalls to Avoid When Trying to Specialize

I n the book “The 22 Immutable Laws of Marketing,” authors Al Ries and Jack Trout say that if you can’t be the first business in a certain category, you have to create another category. Jack Welch, former chairman and CEO of General Electric, followed this immutable law to the T. One of the things that made his tenure so successful was they were always creating new categories in which they could be No. 1. I’ve heard it said that there are riches in niches. When a business specializes in producing a few goods or services really well, ideally without much competition in the market, they tend to be successful. But specialization is easier said than done, and most businesses will miss the mark in one of two ways: Either they will try to serve too many demographics at once with their goods or services, or they’ll specialize in a good or service

customers too many choices. Subway is guilty of the same thing. After flooding their menu with so many options, they had to cut it back because it was slowing down their operations and confusing their customers, costing them time and money. On the flip side, look at Chick-fil-A. They make more per restaurant than McDonald’s, Starbucks, and Subway combined — and they’re closed on Sundays! It’s because their menu is accessible, and, instead of overwhelming customers with choices, they focus on making a great chicken meal. What are McDonald’s and Subway known for? It used to be hamburgers and sub sandwiches, but they lost their niche along the way. As a result, they lost being No. 1 in their category. So, how do you successfully become No. 1 in a niche? You need to know your market and give your market what they want — not what you want, but what the market wants. If you operate a convenience store, you would begin by finding out who lives within a 1-, 3-, and 5-mile radius of your business. What is their socioeconomic background? What goods and services do they buy? Then, serve them those goods and services until you are No. 1 in your market. You don’t become No.1 in a niche by offering too many choices to too many people. That will just confuse the market place, and you will never have a unique identity. Your ultimate goal is to become the go-to place of business for the best burgers, customer service, best selection, or cleanest stores. It doesn’t matter as long as you are No.1 in your category. Strive to become the Jack Welch of your business, and before long, your customers will be talking up your business as the best place to visit because you are the best at what you do in your marketplace.

they like while ignoring what their customer base actually wants or needs. In other words, they’ll try and serve everybody all at once, or only themselves. A few restaurant chains in the fast- food industry fall prey to that first mistake. Some of them have menus like pulp fiction novels — all words and no substance. Take McDonald’s, for instance. I eat there a lot because I travel, and McDonald’s has created a reputation around the consistency of its menu. A McDonald’s cheeseburger tastes the same in Dallas, Texas, as it does in Fargo, North Dakota. I always know what I’m getting. But one way McDonald’s has undermined its consistent menu is by giving its

–Terry Monroe

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800.805.9575

WWW.TERRYMONROE.COM

www.terrymonroe.com

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