5 Reasons Why Specialization Is The Key To Profitability
Being a startup business isn’t easy, but specialization can make a difference in whether or not one is successful. The success rate decreases each year of the first five years in business. According to Small Business Trends, while 80 percent of startups survive into the second year and 70 percent make it to the third, only 56 percent survive their fifth year.
These stats are all the more reason why your startup should be well-planned. According to other stats, the most successful startups are ones that have a specific purpose. Specialization is key.
“Many startups begin as specialists. Tech geniuses with an idea for how to do something better, like Steve Jobs and Steve Wozniak, for example, began with a vision of a computer for the masses. eBay‘s Pierre Omidyar wanted to create an online marketplace for used goods. Sara Blakely created an entirely new market with the launch of her new ‘shapewear,’ a.k.a Spanx,” First Republic reported.
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Here are the five most important reasons businesses should specialize. Specialization is the way to help new business be a success.
When you specialize in one thing, most often you are considered an expert. The more you know about a topic, the closer you are to expert status. And experts carry clout — perception-wise and business-wise.
Customers Prefer Experts
“When given a choice, customers lacking information are more confident in turning to someone who has shown they know much more than they do about a particular subject,” First Republic reported.
Specialists Make More Money
Think about it, a cardiothoracic surgeon will make more money than a general practitioner. And the same tends to hold true for startup businesses.
Specialists Are Efficient
“When you decide to invest time in understanding one aspect of your field — taking a deep dive rather than a broad brush, as they say — you benefit from repetition. You begin to see the same problems or situations more frequently,” First Republic reported.
Specialists can “identify and address the situation faster, thanks to the amount of time” they’ve spent working in and studying the field.
It’s Easier For Specialists To Stay Ahead-Of-The-Curve
When you are a specialist in a subject you will more likely to be up on the latest trends and innovations in your industry.
“In a nutshell, specialization leads to a more narrow expertise, which makes it easier to market a business and attract the right customers, who are often more willing to pay a premium for that specialization,” First Republic reported.