Entrepreneurs take risks without betting the farm

January 18, 2012
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Smart entrepreneurs find a way to take risks without betting the farm.

As I reported in this week’s IBJ, small-business owners increasingly are adding products and services to keep revenue flowing during difficult economic times. (Read the story here.) Butler University’s Jim McKneight calls it a low-cost, low-risk way to grow.

He and other experts recommended that businesses survey existing customers to gauge their interest in potential add-ons, then pay attention to the reaction in the marketplace. If an idea doesn’t work, try something else.

But the strategy isn’t for everyone. Indeed, some entrepreneurs take the opposite tack—narrowing their focus to establish expertise in a few core competencies.

Carmel marketing firm Roundpeg is eager to help clients design and fine-tune their websites, for example, but refers them elsewhere for e-commerce work. Owner Lorraine Ball said profit is up 75 percent since her team made the decision to specialize.

McKneight said both approaches can be successful but acknowledged that it’s often difficult for an entrepreneur to turn away paying customers.

What do you think? Which approach makes the most sense to you and why?

 

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  • Hard to Say No.
    The first time you say no to a project, it is a little scary. But when you then have time for the kind of work you want to do, at the price you want to charge, you know you have made the right decision.
  • Closed doors
    I have a architectural salvage and antique store in Indy and have been in business for almost nine years. I have always been open 6 to 7 days a week to the general public. We also have a web store and Ebay store. We have a very limited time to work our salvage and list things on the internet do to so many people coming in to just look at cool stuff. After a extremely busy week and really poor sales we shut the doors to the public except for Saturday and appointments and found we increased revenues greatly by have focused customers that really want to buy and having time to upload product to the web. It is hard to pass up that possibility of making a dollar from walk-ins but the results of closed doors make me a better bottom line. We do plan to keep open daily until the super bowl is completed. Please check out my web store. docsarchitecturalsalvage.com I hope this was relavant to the subject of your article.
    Thanks,doc
    • Love Doc's!
      Very interesting...I didn't realize Doc's wasn't open daily anymore. I've been equal parts buyer AND browser - good luck with the new approach.
    • Depends on your business strategy
      Either option will work - depending upon your business strategy. Strategy is all about being unique relative to your competition. By that I mean targeting a select customer group with a unique value proposition (products or services at the right price). From the article, those that expanded their product lines offered new value propositions. Those that narrowed their focus shed most likely unprofitable products/services and clarified their value proposition to the target merket. For an excellent read on the subject pick up a copy of "Understanding Michael Porter", a newly published book by one of the strategy guru's proteges.
    • Customer Engagement
      I have seen how social media can help shape the focus of a small business. By asking for feedback on new products, or styles of our current products, we can gauge how a full-roll out will be received. Our customers have helped us figure out how to grow our company over the past year, and they are bought in to our success.

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