There has been much written lately about risk. Specifically about how we as humans tend to be inaccurate in assessing risk. We generally over estimate the potential risks in any given outcome, using it to rationalize inaction. Our default seems to be the status quo, safe, inertia. It's easier to avoid critiquing our estimation of risk, avoid planning for worst case scenarios, and avoid acting bravely, boldly.
But we can over-ride the fear of risk by using logic...
After considering the benefits of specializing last week, let us consider an alternative strategy.
There are valid reasons and benefits to diversify your micro business:
1. For survival.
When just starting out you may not have enough demand for your specialty offerings yet. It can cost a lot of resources and energy to create that demand. Offering more services takes the pressure off and allows you to find your legs. It might allow your business to grow quicker because you are saying 'YES', rather than no. An example of this would be taking on cleaning contracts during the evening and weekends in order to keep your days free to promote your core services.
Having a variety of income streams also provides a little insurance for seasonal fluctuations in business or changes in the economy. You are able to switch gears quickly. An example of this would be offering a snow removal service in the winter when painting traditionally slows down. In a booming economy new construction painting is in high demand, but in a down economy there may be more opportunity in custom homes, residential re-paints, renovation painting, commercial painting, or insurance work. Developing a full quiver of painting skills allows you to adapt to market opportunities.
2. To learn new skills...
Last week we looked at some advantages of either specializing or diversifying your business.
This week I'd like to relate a few anecdotal examples of specialists I've observed over the years to see if there is something in their experiences that could benefit you in your business.
'You can do many things averagely well, or you can do a few things superbly well'
-Greg McKeown, author of Essentialism - The Disciplined Pursuit of Less
Perhaps my favourite is Grant's Ladders in Penticton, BC. Grant used to run Grant's Painting - a new construction painting business with happy contractor clients. But for various reasons (that I suspect had to do with lifestyle, health and family considerations) he opened a small shop specializing in top quality ladders, scaffolding, and all related parts and equipment. In the south Okanagan you can get a ladder at a hardware store, or you can go to Grant's. They serve different markets. Grant's never has a sale. But he offers great products and knowledge. With possibly the worst retail hours ever, he is only open from 8:00 - 9:30 am M-F, but his cell number is on the door if you need a ladder in an emergency situation. Otherwise he has plenty of time to have coffee with friends, play with the grand kids and relax on his pontoon boat in the summer. I think the reason why Grant specialized is to free up his time.
Another of my favourite examples is JHM Drywall Repairs, also in Penticton. It's all in the last word in his business name - repairs. John is a capable drywaller and can board and tape with the best of them. He can frame, insulate, vapour barrier and paint as well. But he markets himself as a drywall repair specialist and often subs out everything else. This means easier work physically, quicker turnover for his cash flow, less competition, positioning himself as an expert problem solver. It also means his competition, other drywallers, don't mind sending work his way. Most are busy with larger projects and they can safely pass along small jobs that would be a nuisance to them. And he can refer larger jobs back. Choosing to specialize allows Jon to hit the gym and walk the dogs before work, get a decent day's work done and still be home at a reasonable hour. I think the reason why Jon specialized is to distinguish his business in the market and allow him to work on his terms.
One more of my favourite examples is...
It's a debate that I've thought about a lot over the years. The smaller your geographic market is, the more pressure to be a generalist. The larger your geographic market is, the more opportunity and incentive to specialize. But which business model is better? Or more importantly, which one is right for you?
Let's consider some benefits for each model...
At dinner one night a few months ago we had the privilege of sitting with the proprietors of a very well established restaurant. It is a warm and welcoming place with a very loyal clientele. It was built from the ground up by the patriarch of the family. His son told me that at the beginning, his father would work at his construction business from 7:00 to 3:00. Then he would come to the restaurant in the late afternoon and nap on a bench, asking the hostess to wake him if any patrons arrived for dinner. He would be at the restaurant late late into evening. Now they are busy 12 months of the year while many competitors close down during the off season. One of the keys to the success of the restaurant has been Father's long term view of all business matters. They always gave their best to their customers, treating them like family and never serving anything that wasn't the best quality. They have never advertised, choosing instead to focus on treating every customer like gold.
This conversation got me thinking about my own painting business and the idea of laying bricks...