Our last two articles covered the topics of WHY you are business followed with the HOW and WHAT of your enterprise.

 

Having examined and understood your reasons for setting up your business, you have assessed and established your Vision and how this Vision will be met through the Mission and Values of your enterprise. Whilst this appear to be aspects of ‘soft’ management they are important and integral to the operational aspects of the business – the delivery of your products and services.

 

Now we need to look at the WHERE of the business. Commonly referred to as the Market or Marketplace – where you will trade your products and services. This is not just looking at the geography of your target are (be it local, regional, national or international) but also other various facets that make up your marketplace. Meanwhile the marketplace looks only to your products and services, but can use your WHY, WHAT and HOW to differentiate you from other similar service providers.

 

For many arborists, the geography of your target marketplace will be the local area to your business and or family home – areas that you may know well. Your vision and mission may include plans to expand regionally and wider afield. For others, delivery of their products and services could be a nationwide aspiration.

Generalised or Niche Provider

 

Another facet of the marketplace is one of ‘generalisation versus niche’. Is the business going to be ‘jack of all trades’ delivering a wide portfolio of services to a wide clientele base? Or will it be a specialist business, delivering a small portfolio of services focussed on developing and improving the quality of the services aiming to be a subject matter expert?

 

When Steve Jobs returned to Apple in 1996. He found the product development team working on over 100 different products. One of his first decisions was to slash the number of products Apple was developing to just four. Suddenly, the company had extraordinary focus and clarity around its product strategy and stopped being distracted by products not considered to be core to the company’s success.

 

Either is plausible – undertaking a SWOT analysis of your capabilities to meet the marketplace demands will help make the appropriate decision for your arborist enterprise. (We will discuss SWOT in a future article).

Test and Know Your Marketplace

 

One of the great stories of knowing your marketplace can be exemplified by ‘Betamax versus VHS’.

 

In the late 1970’s Sony had introduced the ‘Betamax’ format of video recording and was competing in the industry over the ‘VHS’ counterpart from JVC. Betamax was superior in terms of quality of recording and picture quality, although it was pricier and enabled Sony to be the dominant of the two formats. Ultimately though, after a decade, VHS became

dominant and the Betamax format had left the marketplace. Several factors had contributed to the demise of the Betamax format – JVC had introduced other suppliers and competitors into the VHS marketplace thereby pushing the volume of VHS equipment available in the marketplace to that much greater than Sony. Price was a factor as VHS was cheaper, but many observers also noted that the length of a Betamax recoding was smaller in capacity than that of VHS. For example, Betamax could not record 3 hours of an American football game, whilst VHS could. Sony was convinced that people wanted superior quality and that an hour of capacity was all customers could tolerate. VHS went on to lead the marketplace for 40 years before giving way to DVD’s and now streaming services.

 

Coming back to today, having determined the geography and service portfolio, most entrepreneurs will ‘test’ their chosen marketplace and continue to do so as the enterprise grows.

 

Initially, this could be through friends and family, who will use the products and services on offer, (hopefully) providing honest feedback. They often help to promote your business to their network of personal and professional contacts.

 

Whilst it sounds counter intuitive, successful entrepreneurs will try and speak to other people who were already doing what they wanted to do. For example, an arborist or organisation who offers similar services but in a non-competing local area. This provides valuable insight into what works and what doesn’t. However, if your area of specialism is highlighted unfavourably, deeper research needs to be conducted to determine why. It could be that the initial timing of the service was not required by the marketplace, it maybe that the service provider needed additional skills and experience to penetrate the market which you have or can develop.

 

Then there is the competition. Understanding the successes and failures of competitors is a useful barometer. When evaluating the competition, it is not just about price or service – examine their vision, mission and values. Pricing as a sole leverage in the marketplace is a high-risk strategy – the chance of someone always being cheaper is on the horizon – remember to evaluate your values against those of the competition. Remember the Betamax and VHS story.

 

Whilst many successful competitors research the competition, others will be aware of them but look to market trends that could affect the marketplace (and therefore affect the competition).

 

Another video related story is that of the Blockbuster chain. Drive through many Western towns and cities you will still see closed Blockbuster premises. Blockbuster was founded in 1985 in Dallas. What set it apart from the competition was not just that it stocked over 8,000 titles but had computerised checkout and inventory processes. Rapid growth followed, through the acquisition of smaller stores and major cash injections from investors. The very early 1990’s saw Blockbuster open it’s 1000’th store and overseas expansion saw it buy-out the Ritz video rental chain in the UK taking the number of stores to 2,800. In 1994, Viacom bought Blockbuster for $8.4 billion. One of Blockbuster’s strong income streams was from penalising customers for late returns of hired tapes – accounting for roughly 16% of revenue.