In today’s world, standing out from the crowd is preferable to being an also-ran. With COVID-19 still among us, supply chain challenges and staffing shortages are adversely impacting many businesses’ ability to be successful. Anything that can positively differentiate a business and make it stand out above other like businesses is important. Being a commodity does not differentiate one from others, and businesses that are more commodity-driven are at greater risk.
A business with a specialty niche has a greater chance of being successful than a commodity does, all other variables being equal. However, having a specialty niche does not guarantee success. Business is much more complex than that.
Knowing one’s customers and what makes them one’s customers is critical to business success. It is not possible to consistently meet your customers’ expectations if those aren’t known. Knowing your market is also necessary. If your market is the luxury market, your customers have different expectations than those of a commodity market.
Cash flow is critical to a business’s success. Many good businesses have closed due to cash flow issues. In today’s times, this may be even more important than ever. During the past two years, many businesses have not been able to serve customers due to mandates related to the pandemic. Many of those were not able to make it through these times. With fewer paying customers able to purchase what the business was selling, cash flow problems put the nail in the coffin of many businesses. The food service industry has been hit especially hard in this regard.
All have certainly not been doom and gloom during the pandemic, however. The pandemic created new jobs and new businesses, such as the making of masks and the increase in the need for hand sanitizers. These items quickly became commodity items, with style as the main differentiator, followed closely behind by cost. As such, the demand for any particular brand is limited, and the growth in these commodity items alone cannot provide sufficient profit to make these businesses strong.
Quality has become even more important during the pandemic than it is during “normal” times. Quality is often related to cost and value, and poor quality is costly. With many people having less disposable income and holding tightly to what they have, fearing the unknown, they have not been as likely to replace items that are in good condition as frequently.
It is probable that some of our buying values have changed during the pandemic. Before the pandemic, we had already seen a shift from buying tangible items or things to interest in and purchasing experiences. In the past two years of COVID, this trend has accelerated. While engaging in experiences has been limited in part due to COVID and especially travel restrictions, it is clear that the interest in time spent with loved ones has increased significantly. For many people creating memories through experiences has taken on greater meaning. Now that we are finally beginning to see positive changes in COVID numbers in many states, we can expect the interest in travel, including international travel, to peak. Many people are more than ready to get out and engage in life again at a different level than has been possible these past two years.
Is your business positioned for the return to more normal business activity? Or are you still posting “Help Wanted” signs, using lack of staff as an excuse for a variety of business problems? If so, and your business is a commodity business, expect your competition to figure out solutions that will render your business obsolete. If your business is a specialty business, expect your customers to have greater expectations of you. If you meet or exceed those expectations, the business you experience can be exponentially appreciated.
Of these, commodity or specialty, which provides a greater opportunity for success? Where is your business positioned, and if you do not like the answer to this question, what will you do to change?