Business consultant Peter Bruu uses three segments — Expert, Experience, and Efficiency — to categorize small businesses.
The Expert business relies on the creativity of a few highly skilled individuals who provide custom solutions.
The Experience business is systematic and has the equipment and strong estimating metrics to provide a narrow range of services.
The Efficiency business targets a specific area and hires employees and continues to train them for that focused skill set. This is the most price-competitive segment.
Bruu, president of Simple Business Technology in Rochester, N.Y., says most small businesses take any client or project that walks into their office, and end up working in two or three of these segments. But, he says, this can cause brand confusion and can decrease profitability.
For example, a commercial drywall business is an Efficiency business. “That business owner has the equipment for 10-foot-wide drywall installations. If [a client] asks him to drywall a few rooms in a house, [the drywaller] is now supporting two different segments,” Bruu says. “He has revenue, but it's bad revenue. It's not as high as it could be.”
DISCIPLINED APPROACH When he begins working with clients, Bruu asks them to choose one of the three segments. Clients often reply that they cannot choose just one segment because they can't afford to turn away customers. He helps them select a segment by looking at the equipment the company has; the company's market, future plans, assets, and most profitable jobs; and the owner's responsibilities.
In addition to increased profitability, the benefits of choosing a focus include strengthening brand and solidifying your company's place in the market.
Once the client selects a segment, they must have the discipline to stay in that segment. “Business owners are entrepreneurs, and they have that entrepreneurial streak — they are always looking at other options. They tend to want to stray from that path,” he says.
Bruu also helps clients create a business plan based on their segment focus. He says that if they should want to chase a new idea every week, it helps to have an existing plan with which to compare that new idea.
