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...
Benefits of Specializing:
- you can become highly skilled quicker
- you require less tools and equipment
- you have far less competition
- you can charge more for your knowledge and experience (think of a classic violin repairman vs a
framer - both are carpenters, but one has far less competition)
- your work flow is more efficient (you're not constantly changing gears throughout the day or week)
- you have more control over your work, setting more of the terms
- it is much easier to build a referral network (people working in peripheral services won't be afraid
that you will
steal their customers; people feel safer referring experts as they are putting their name on the line)
- your marketing becomes much easier and clearer (if a prospect is confused about what you do, he
will reject it all)
- less stress
- since you need more customers you build a wider, more stable base for your business (you're less
likely to rely on
just a few customers)
- residential customers usually have a specific need and are looking for a specific solution
Benefits of Diversifying:
- you have more streams of income, providing some financial stability
- you don't need as many customers (you can sell more services to the same client)
- you can adapt to market changes quicker (seasonal, trends, economy, etc)
- more opportunities to learn and develop new skills
- learn to be adaptable and deal with change
- deliver more value - get more things done, quicker and cheaper for the customer
- some commercial customers usually have multiple needs but prefer the simplest solution
What is best for you will depend on your market, your objectives and your personality.
Next week in Part 2 we will consider some examples of each, as well as the 3 Key Factors to consider before deciding to market your service business as a niche or generalist.
What is your preference?
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