A few weeks ago I had the opportunity to speak to a group of fellow entrepreneurs about how I started, grew and eventually sold my last business, Network Logix. Boiling the lessons learned down to a 1-hour presentation was a pretty daunting task when I started preparing. I did a lot of things right, and I also did a lot of things wrong. Mistakes are a powerful and sometimes cruel teaching tool. I only consider things to be a “failure” if I don’t learn anything from it. I learned a lot!
After seven or eight revisions (I lost track actually) and many hours of thought, I boiled it down to 7 key lessons I learned over the last 10 years. My hope is that I can save a fellow entrepreneur the pain and headache that I endured, and find success faster.
Lesson 1: Find a Niche and OWN it!
Like most startups, finding new customers is pretty difficult. When I started my IT business, like everyone else, I took on anyone who would write me a check. Most IT firms will tell you their target market is, “businesses with 5 or more computers and a server in [fill in the geographic area]”. I wasn’t any different. Do you see the issue with that? You can’t market to that many people no matter what area you live in. You just don’t have the marketing dollars. All of your marketing is “buck shot” effort. You shoot something out there and hope it sticks. Most times it doesn’t, and you quit after a short period of time or run out of money.
Client acquisition was pretty meager for the first 4-5 years. I mainly relied on referrals, which is OK, but won’t allow you to scale quickly unless you have a regular system in place for building these. I didn’t. So, I started to look for commonalities in our client base. I found that we had quite a few accounts in the Multi-Family Housing market. (Yeah, I didn’t know what this was either when I started). The Multi-Family Housing market are apartment owners and/or management companies. Since we were providing IT support for many of these companies, we came to know the issues they were having in their business. This knowledge allowed us to provide targeted recommendations when it came to their IT needs. We became a valuable part of their business instead of just “The IT guy”.
This was definitely a Light Bulb moment. I now knew exactly who I would be marketing to. I could finally stop wasting my marketing $$$$. I created a specific message (i.e. Their Big Hairy Problem) and how we could solve it for them. I was amazed how quickly word spread, and how easy it was to close more business.
“Don’t put all your eggs in one basket”. I’m not sure where the expression came from, but it’s definitely applicable in business. Having only one vertical can be dangerous for business if that industry falters. So, I started to look again at our client base to see if we could find a second niche market. I applied the same principles to a second market…attorneys. Having a targeted message and SOLUTION made client acquisition much easier. Imagine that!
Obviously this is simplified version on Niching your business. I am working on education topics for the rest of the year. Would you be interested in learning more specifics on this topic? Let me know in the comments below.
Stayed tuned for “Lesson 2: Sell, sell, sell” next time.