The Biggest Mistake I Made In Running My Own Business
After announcing last week that I’d officially sold my own small food business earlier in the year, Amanda C emailed me to ask if, when looking back, I’d be willing to tell her what the biggest mistake I ever made was. Rather than just share the answer with her, I thought it was worthwhile to share it here since it is a very good (and very hard earned) lesson learned.
Focus Focus Focus On Your Target Market
Actually, let’s take this a step further – not only should you focus on your target market, but when you’re starting out you should laser focus down to a very tiny niche within that target market and then strive to own it completely. For example, if you make empanadas and part of your sales strategy is to sell them wholesale to retailers, you should focus on conquering your local market before spending too much time, energy, and money on branching outside of your town or city.
How I Learned This The Hard Way
As a little background, my very first client ever was Neiman Marcus and, based partly on that, my entire distribution strategy was selling wholesale to large retailers. Business was booming for a while and I was so busy figuring out the many many logistics of operating within their parameters that it left me with no time to secure small retail accounts or work on direct-to-consumer sales. In order to play with the bigger boys I also had to put a considerable amount of money into B2B advertising, attending and exhibiting at tradeshows, B2C advertising, and ensuring that I carried $5M+ of liability insurance. All of which took a huge chunk out of my profits.
What’s more, when the recession hit in 2008 some of my bigger retailers pulled back their ordering and without a strong, loyal, local base to rely on I had to scramble for two years to make my sales goals. And by scramble I mean spend money on sending out samples, exhibiting at tradeshows, etc etc. This isn’t to say that if I’d had a strong local base it would have been the end to all of my problems as many smaller retailers simply didn’t survive the recession – but when money got tight all the way around I didn’t have a loyal following I could count on or face-to-face relationships with retailers where I could take them out to coffee and find out what I could do to make their life easier. Instead I’d just get emails from “corporate” telling me how things were going to change or not change.
As a small business owner there is a lot that’s out of your control, but had I spent more time developing and nurturing relationships with the end consumer and with my local retailers I think it would have made 2008 and 2009 much less stressful. While my company obviously did survive those hard years, I think I missed a big opportunity to really endear myself to consumers and retailers at a time when so many other brands were shutting down. It was an opportunity for me to gain market share and I wasn’t positioned correctly to take advantage of it.
This Doesn’t Mean You Shouldn’t Dream Of World Domination
Obviously, you should dream big and aim high with your company but spending the time building a loyal local base will give you time to test out ideas, work out logistics, and give yourself a strong foundation from which to grow from.
What do you think? How does this line up with your entrepreneurial experience?
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