Do you know what business you’re really in?

Many companies, particularly new ones, make the mistake of not understanding what their business really is. This lack of understanding or mis-understanding then cascades into a series of wrong decisions about their company’s branding, marketing, sales, and message.

It may seem obvious what business you are in – just take a look at what product or service you offer, right? If you manufacture toys, then your “business” is toys. If you are a CPA, then your “business” is accounting and tax preparation. But, is that really what your customers are looking for? No, they are looking to fulfill a need and satisfy an emotion.

Your toys provide parents with the enjoyment of seeing their child excited about a new toy and of the interaction they get to have with their child while playing together. Your “business” is family bonding.

Your accounting and tax services provide your clients with a deeper knowledge about how their company is doing and in what areas they can make improvements to their bottom line. Your “business” is providing companies with the information they need to make the best decisions for their business.

The key to understanding what business you are really in is to think about the need and emotion you are satisfying, rather than the “feature list” of what you provide.

Think about Starbucks. They became wildly successful because Howard Schultz, the CEO, knew that people could go to any number of places to get a cup of coffee (convenience stores, fast food chains, cafes), and at a cheaper price than he was selling. That’s why he made Starbucks about the experience (“the third place”), not about the drink or the price.

Starbucks’ “business” is not coffee; it’s about the emotions and senses you feel when you walk in – the vibrant, energetic pace, the smell of coffee brewing, the hip music and young workers. Even the shorthand they use to describe their drinks (“grande skinny vanilla latte, soy, double”) makes you feel part of the in-crowd once you learn it.

A couple of years ago, Starbucks began making and selling hot sandwiches in its cafes, hoping to increase revenue. However, it backfired because the cafes started smelling like cooked food rather than coffee and customers didn’t like it. So, Starbucks stopped selling them. They were reminded that their business is not coffee or food – it’s the experience.

Do you know what business you’re really in? I would love to hear from you – leave a comment or contact me directly!

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