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Friday, August 01, 2008

Is Your Small Business In Trouble?

If you are running a small business that is now in trouble, chances are that you are thinking furiously about diversification and are about to launch a different product quite possibly in another field altogether. Diversification is a highly favored strategy for many.

But hold on a minute. Is that the right way to go?

Think about it for a minute. The sun is very powerful but because it spreads its’ rays over a wide area, its’ rays are mostly harmless. Compare that to a laser beam which is many times weaker than the sun. However because all the energy is focused in one place, it is able to cut through metal and even something as hard as a diamond.

There is a great secret behind the power of focusing and there are thousands of stories to be told.

We all know the Coca Cola and Pepsi, two keen competitors in the world soft drinks market. Interestingly Coca Cola has always been the more profitable company. Many experts attribute this to its’ sharp focus on soft drinks. Pepsi on the other hand is a very diversified company that is in many different businesses, many of them are supposed to compliment it’s soft drinks business, like its’ heavy investments in the manufacture of snacks.

Carefully study any business you care to think of and you will quickly realize that companies that have a focus on their core line of business or niche tend to do much better and survive much longer in the market than businesses that have diversified all over the place.

The way to save your small business is to re-focus within the narrow field that your business covers. The solution may be in going for an even tinier segment of the market you are kindly targeting. Less is actually more because you will end up being a specialist in a world that is filled with generalists.

Look at it this way, it is much better to be a big fish in a small pond than it is to be a small fish in the big cruel ocean.

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