May 28, 2020 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

Articles for Entrepreneurs


Business Strategy


How Focused Should Your Business Be?

The hardest decision entrepreneurs need to make is deciding what they will not do. Many entrepreneurs and businesses alike tend to spread themselves too thin and lose their core focus that originally made them successful. Knowing how focused you want and need to be can help you draw clearer boundary lines when it comes time to finding growth and expansion strategies for your business.

The more focused a business is, the more powerful that business and brand becomes in its respective category providing a very strong competitive advantage.
(article continues below)

This concentration effect helps businesses concentrate all of their resources on focusing on a single product category or a single market. Firms that have the strongest concentration effect within a specific market are often the market leaders within that market. Knowing that focus and concentration effect are important, just how focused and concentrated should your business be?

Looking at the food industry, we can see some wildly successful firms that became successful because of their ability to focus on a single product category that provided them with the greatest concentration effect in their respective categories. No other firms can displace these leading companies in their respective categories because of how strong their concentration effects are. Looking at some of the leading restaurants, we can see just how focused and how strong their concentration effects are;

1. Cinnabon focuses on selling cinnamon rolls

2. Subway focuses on selling only subs

3. Noodles & Co. focuses on selling only noodle dishes in its restaurants

4. Jamba Juice focuses on only selling fruit smoothies

5. Starbucks focuses on selling premium coffees

6. Buffalo Wild Wings focused on selling buffalo wings

The one common factor among these leading brands is their ability to focus on the food category in which they started. Backed by strong marketing initiatives and fast expansion, these food companies have built nearly unmovable competitive advantages in their respected categories. But what would happen if Cinnabon started selling hamburgers and was now competing with McDonalds, Burger King, and Wendy's or if Jamba Juice started trying to sell and promote ice cream in their stores? Not only do those products not fit with the companies overall food offerings, but more importantly those companies lose their concentration effect on the foods and products that make them successful today.

Firms need to expand and often times they take the path to least resistance by expanding their product offerings into new markets, however if those expansions do not fit with the current product offering, they dilute their concentration effect. One recent example of this expansion flaw is with Lululemon.

Lululemon is a rapidly growing women's yoga clothing retailer. In its latest investor presentation, Lululemon states that it was "founded to address a void in the women's athletic apparel market". Further, they state that Lululemon is an "Iconic brand representing health and women". It is clear to me based on my perception of Lululemon backed by the description of Lululemon by Lululemon that they are a women's clothing company. This is why I was shocked to see a men's section in the Lululemon store that I walked into the other day with my wife.

Even big firms go astray, but as an entrepreneur you cannot afford the cost of straying from your core value proposition. Stay true to your focus and build as strong a concentration effect as you can in a product or service category that is not currently being dominated by one of your competitors. The stronger you build that concentration effect in that category, the greater your competitive advantage will be and ultimately the greater your success.

Conversation Board

We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.

Questions, Comments, Tips, and Advice  Code Image - Please contact webmaster if you have problems seeing this image code
Problem Viewing Image
Load New Code



Additional Resources for Entrepreneurs

Search Engine Marketing

Social Marketing Optimization

Business Forms

Business in the Jungle - Business in Fiction - Negotiating

Radio Ad Costs

Newspaper Advertising Rates

City-Specific Resources for Entrepreneurs

Small Business Insurance

Global Entrepreneurship

China & Entrepreneurs