Entrepreneurs are increasingly asking what’s the most important thing that a business should focus on as we navigate through the pandemic and look forwards to a growing, but still fragile economy.
The first area to assess is your positioning in the market. For start-up businesses, creating focus and alignment across your positioning is normally the difference between success and failure, for more established businesses it can be the difference between enjoying working on the bigger, future or frustration at working in a stalling business on day to day tasks.
- What product are you taking to market?
- Who are you selling it to?
- How do you service your clients?
- What’s the value exchange; price, convenience, experience?
There are many recent examples of businesses pivoting or adjusting their positioning due to Covid such as:
- Brewdog making anti-bacterial hand lotion.
- Wholesale suppliers of fruit and vegetables to high-end restaurants now selling direct to consumers and packaged as ‘healthy’ hampers.
- Music management companies now serving live music via online streaming direct into the living room.
Positioning is super important because it determines the underlying profitability of your business and here is how.
Within any industry there are only three markets: Premium, Mid-Market and Mass.
If you align your positioning (Product, Target Market, Service and Price) against one of the three markets then you should have a profitable business.
Let’s take airlines as an example. Ryanair and Emirates are both clearly aligned across Product, Target Market, Service and Price, albeit at different ends of the scale.
Whether you like the company or not, Ryanair is focused on a mass market, generating high volumes of passengers at low margins which in normal times is a profitable business model. Emirates business model focuses on higher margins and lower volumes which drives the company’s entire proposition as demonstrated in their strapline ‘Fly Better’.
Ryanair’s mass-market position is why they are so set against leaving empty seats on their aircraft to support social distancing. To remain profitable they will be forced to increase their prices otherwise they risk lower volumes x low margin = unprofitable business. Emirates premium position means they are better placed to absorb volume loss without increasing prices.
Understandably, most start-ups will target anyone to buy their product and the majority will always go the extra mile to over-service, sometimes because their product wasn’t specifically designed for such a broad group of clients. When it comes to pricing, they often undervalue their product or service as they don’t have the confidence to charge the full price for fear of losing clients.
Consequently, businesses are building additional cost and complexity into their business model and delivering lower profitability.
This is a major reason why many start-ups fail or don’t grow fast enough to remain sustainable and entrepreneurs embedded in existing businesses become disenfranchised.
Knowing and focusing on your position in the market will inform your strategy, marketing and enable your business to scale with speed and confidence.
To discuss how accessing Shirlaws frameworks and methodologies can help you grow your business please contact us.
Andy Ripley Business Coach
Andy ran international banking businesses for HSBC in the UK, Europe and Middle East and has led successful assignments in Mexico, US, Canada, France and Hong Kong. Andy knows first-hand the challenges of growing businesses, managing people and developing an empowering culture.
After 30+ years in Financial Services, Andy qualified as a Business Coach and now runs his own business supporting a broad range of clients including Business Owners, Corporates and Start-ups.