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What Business Are You In?

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This column is about businesses whose owners believe they’re in a business other than the one they’re actually in. I’ll give you an example:

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Newspaper companies are in the information business, not the newspaper-printing business. But for the longest time, you  couldn’t tell newspaper owners this wasn’t the case. They got behind the competition and were awful at transitioning to Web publishing, the platform that is crushing the newspaper business model. The result is they lost precious market share and newspapers are dying as I write this.

Have you ever heard the one about the buggy whip?

Thousands of people and companies that produced buggy whips around the country thought they were in the business of, well, making buggy whips, until the automobile came along. They didn’t realize, as essayist George Steiner wrote, that they were actually in the “starting” business. They “started” horses to get moving so why didn’t they anticipate market changes and make starters for automobiles?

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Nearly everyone has heard of Google. Google is famous for its Web search engine and offers a suite of free products for anyone to use on the Internet. One of them is Gmail, an email service that offers a huge amount of space to save all your emails. Best of all for the user, it’s free, that is, the user doesn’t have to pay money to use it. Because of this, you might think Google is in the email business. But in exchange for that free email service, Google serves up text ads around the interface of your Web browser. Guess where Google gets the information to get ads targeted to you? Google’s computers “crawl” through your email messages, finding the terms they need and matching them against advertisers who bought space. If any of you have ever used it, that’s how they manage to be so spot-on about your interests.

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The question “What business are you in?” is an appropriate one for any time, and even more so during these absolutely tough economic conditions. It’s a challenging question and not such an easy one to answer, especially if you haven’t thought long and hard about it. It’s also a question that could determine if a business is relevant and cash-flow positive one day and six feet under the next.

Take, for instance, drug stores (or pharmacies, depending on where you live). Drug stores sell a lot of products, from skin cream to toothpaste. At some drug stores near where I live, I can also buy anything from a light bulb to duct tape to yogurt. I used to have to buy those items at separate stores. But as Americans got busier and busier in their daily lives, drug stores realized they had to stock more of different types of products to capitalize on the fact that once you have someone in the store, they might as well make it count.

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It’s not a matter of trying to be everything to everyone, but rather, cashing in on foot traffic. Now in many drug stores, there are blood pressure monitors. And in some, there are clinics staffed by doctors and nurse practitioners. After getting a prescription, you can walk five steps to the pharmacy to get it filled.

So, is a drug store in the business of selling health-related products? Or is it in the business of keeping people alive longer, through offering good hygiene products and medical services?

This leads us to the obvious question: If you own, manage or work at a retail store, jobber, or WD, what business are you in?

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