What advice would you give small companies trying to prioritize target industries? Robbie Baxter of Peninsula Strategies, an expert in on-line, recurring revenue streams, asked me a this very interesting question!
At companies with a sales history, industry-specific activity and resources are focused in two kinds of areas: Where most revenue is coming from already (this is by far the more common focus area), and where there is greatest opportunity for growth in the future. There can be lots of complex analysis, but in reality few big companies do much proactive planning. That’s a whole other blog, though.
With a smaller company, the first part of that equation is missing. They don’t have the sales history, references, and channels to naturally leverage into an already-active vertical market.
So, here is a try at some things I’d look at as a small business deciding where to focus.
1. What industry will value what you do most? Where will you impact mission-critical results?
2. Over time, what group of customers are going to be needing you more and more (and feeling increasing pain you can solve) due to external pressures and trends in their industry?
3. Where are you best able to access the financial decision-makers? (This is a combination of your company’s existing connections and lists, and the target industry’s propensity for doing business with small companies.)
Note that its easier to find ways to reach financial decision-makers than to change the core value of what you do or convince an industry to focus on non-critical issues. Unfortunately, many small companies start with #3 as the first, not last criteria for selecting target markets.
Please comment with your own thoughts on selecting target industries at small companies.