What Business Are You In?

What business you are in does not have an absolute answer, since similar enterprises can successfully define their businesses in different ways.

A shopping mall, for example, can define its business as a real estate business and drive its efforts on the basis of maximizing returns per square foot. Another might define its business as the entertainment business and drive its efforts on the basis of providing people with many options in entertainment and food.

If you own a pizza shop, you might seek to be in the “lunch” business so patrons know they can stop in during lunchtime for good, fast pizza. Or, you might be in the “evening meal” business, offering customers many options of snacks and dinners.

It is necessary to discern what business you are in.
By defining (or redefining) your business, you can apply creativity and open up a new way of viewing the business. Additionally, this helps create a niche that gets you to zoom in on customer needs and how to serve select groupings efficiently.

Sometimes you find that some types of customers are simply a headache to deal with. They do not seem to fit in with your profile, resource base, and what you want the business to do for you. By defining your business appropriately, you will cut down on the number of such customers. Our company had a customer who used to buy an item that was sold in a case of twelve. This customer used to ask for six cans only. We would sell those six cans to him, then keep the remaining six cans for a long time, until someone else wanted six cans. This seemed like good customer service, but in reality, it was more costly to do it this way, without any commensurate benefit to the firm. This “flexibility” was in fact a distraction.

You can define the business to address more lucrative or otherwise more profitable niches.
There is a story about how the old-time railroads thought they were in the “railroad” business and did not adjust to competitive pressure and changing times. It is thought that had they defined their business as “transportation,” they would have been better able to respond to market changes and needs.
It is from this perspective that you are encouraged to deliberate this point and see how best to position your business—in search of a lucrative niche.

Understanding what business you are in also helps you to uncover what business you ought to be in, in order to take advantage of developments and innovations in the marketplace and in entrepreneurship.

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