One of the biggest mistakes both new and old entrepreneurs make is trying to be all things to all potential customers. This dilutes your marketing efforts and confuses your brand. It also wastes money on marketing and inventory.
The 80/20 rule, no matter how skeptical I was when I first heard it, proves reasonably accurate over time and application. It states that 80 percent of your business comes from 20 percent of your customers and 80 percent of your customers do 20 percent of your business.
When planning for next year, remember that every penny you can save from waste might make the difference between disaster and success. Take a look at where you made your money during 2012. Chances are, you will see a clear indication of where you can focus on building your business. Emphasizing your strong points and growing that sector of your business is where you can optimize your costs. Further, apply some creative thinking to the 20 percent business. Cut back inventory in this area or offer those goods on a delivery-only basis, which allows you to source them and send them out rather than carrying them in inventory.
If you run a service business, put your marketing and branding emphasis on what actually makes you money. Although you don’t have physical inventory, you spend valuable time on services or clients who may actually cost you money or opportunities to market to your best client base.
Define your target customer. What does that customer want? What draws that customer to your business? If you don’t already know what those customers like about your company, spend some time calling them to thank them for their business and, while on the phone, ask what it is that you are doing right. This is the best market research you can possibly do. It also gives you the chance to ask them for referrals.