Should Business Take a Specialized or Diverse Approach to the Market

Businesses have opportunities to provide a narrow range of products  through specialization or to offer a broader range of products through diversity. Sometimes it can be difficult to understand when it is beneficial for them to take one approach over the other. This can be determined by current revenue as well as the market itself.

If the market is saturated and future growth of sales is likely to be limited then it makes more sense to diversify your offerings into more lucrative markets. The business will need to explore these new options or they will slowly be squeezed by competition into a declining market.

The other option is to diversify and do something better than anyone else. This should occur if your business is too small to be all to everyone or if you are a large business offering something unique. For example, a patented product might lead to similar patented products that are unique and have market appeal.

It isn't always easy to know when to diversify and when to specialize. Much of it depends on the competition in the market. If your competitors cannot offer something as unique as your business and not at the same quality level then it makes sense to get better at it because you build your own market.

However, if the prospects for growth are low and your company doesn't have superior strength in one area they may need to diversify to ensure they have multiple revenue streams. Large companies invest in other areas because they have the capacity to manage multiple product lines at once and the resources to move to the top of the market through economies of scale.

Cost of Business Transactions

Cost of transactions internally and externally have a determined impact on corporate profits through lowering general internal and external operating costs. When organizations improve upon their internal transactions by updating of processes and procedures, as well as the technology they use to conduct such transactions, they can improve overall performance. It is important to consider the benefits of internal transactions cost and external cluster costs when encouraging business growth.

All activities within an organization have transaction costs. Whether these are phone calls, emails, documents, movement of information, energy transfers, product movement, etc... it makes no difference. Each of these transactions can cost the company money and slow their productivity.

A common internal infrastructure improvement that lowers transaction costs and improves upon internal activity is IT systems. A large amount of money has been poured into this approach over the past few decades with great success. This include hiring, training, and updating technology infrastructure (Banerjee & Kumar, 2002).

Companies also exist within geographic infrastructure that exists both as a cluster and part of a larger regional hub. When regional infrastructure is weak then it will cost more to make transactions across companies. In turn, it will be more expensive to run a business in one city over another.

It is important to determine the internal costs of completing transactions as well as the external cost of completing business in that particular region. Businesses that develop their internal infrastructure should also consider pushing for external infrastructure changes in order to improve the region as well. Viewing transaction costs from internal and external vantage points can help improve positive adjustments.

Banerjee, S. & Kumar, R. (2002). Managing electronic interchange of business documents. Communications of the ACM, 45 (7).

Justify Your Numbers When Creating Budgets

Budgets are not something to be created in jest or in the last minute. Sketchy numbers and quick fix cramming is not the way to go when it comes to putting forward a financial plan. I have seen managers fail to justify their budgets and this leads to embarrassment and/or lay offs. Start your budgeting project early and come up with itemized numbers that can be supported.

I once worked with someone in training and they asked me how they could justify their department. My answer was they would have to show how they are contributing value and that their budget was justified in order to continue to bring that value.

The person was not well schooled in common business practices and wasn't able to use metrics to support the value of her department and wasn't able to justify her budget. At the end of the day, she and her employees were laid off to allocate resources to other pressing areas.

Likewise, I have seen managers put forward budgets with sketchy numbers that are not supported. When they were probed, as most certainly will happen, they were hard pressed to find justification for their numbers making them look less than professional.

The best advice I can offer on budgets is to start early, justify the numbers, make sure that your budget actually supports your goals. They should be in alignment with your strategic plan and take into consideration the necessary research needed to create a sound and supported position that can be discussed in detail. Don't wait until the last minute to complete your work because someone will go over it with a fine tooth comb.

Reaching Beyond the Stars

There are a few individuals in the world that do much more than accumulate money and wealth. They reach beyond the stars to enact a vision. They are characters that are driving beyond something related to self-gain and into personal challenges. They seek to create a better world and develop something few other people dared to do.

I've always been impressed by people who have climbed Mount Everest, discovered new plant species in the Rain Forest, or explored the North Pole in wooden boats. They are people who have a drive beyond what most of us would ever experience.

Many people give up at the first sign of difficulty and hardship. Instead, visionaries go forward and break new ground despite all odds. They are will creators that are more stubborn than the world around them.

They engross themselves in their pursuits and live, eat, breath, and dream about their passions. They become obsessed to the point that it is nearly all consuming. Their practice moves them to a level of performance others can't find.

Reaching for the stars is a passion for people who are doing it. It doesn't matter if it is starting a business, sailing around the world, or completing some other difficult task. The goal takes on a life of its own and sets and example that other people will have difficulty following.

Get SMART with Your Goals

Attaining of goals is a defined process that helps to increase outcomes. It isn't about shooting in the dark in hopes of blindly tripping over your goals. A little planning can go a long way in fostering positive outcomes. The SMART goal setting technique can help you define what you want to do and in the time frame you want.

Specific: Be specific and write down exactly what you want. Don't be too broad.

Measurable: Your goals should be measurable.

Attainable: Your goals should be reasonable and realistic.

Time Bound: Make sure that you have a specific time-frame to complete your goals or they will go on forever and not be achieved.

Everyone Should Appreciate the National Forests

As a business lover and nature lover I find that protecting our natural resources is important for our survival as a species. We spend a good amount of the country's early days conquering nature and now we must move on to living in harmony with nature. Protecting national forests for recreation and our species health is important.

If you ever walked in the forest after a snow storm, or live in a rural area, you are likely more connected to nature than many city dwellers. It becomes a part of your life and who you are. If you enjoy it then you may spend a considerable time in nature oriented activities and reaping its many benefits. I encourage everyone to spend a little time in nature to appreciate it.

Study Says People Dying Younger-Maintain Your Health Routine

Life expectancy in the U.S. declined over the past year and people are now dying younger than over a decade ago. According to a study by the federal Centers for Disease Control and Prevention the biggest increases are related to drug overdoses, car crashes, and gun shots but most revolve around health related issues.  The study helps us highlight the importance of staying healthy and fit.

We have only one life to live but our health is a series of small decisions that relate to our health. The study highlighted that heart disease, injury, respiratory, stroke, diabetes,  suicide, and Alzheimer's are some of the main causes of death. While some of this is genetic, is also related to lifestyle choice.

Each day we make many choices that lead to our health or illness. The obvious big ones are smoking and heavy drugs. However, there are many small choices such as exercise and eating. For most of us is the later that eventually leads to illness.

Eating is based on habit and culture but can be changed to create a more healthy lifestyle. As a french fry addict I have to learn to replace those artery clogging goodies with something else like sweet potatoes and mashed potatoes. These small choices add up over our lives and lead to a particular health outcome.

It is also important to keep a strong work out regiment. This can be anything like running, jogging, yoga, boxing, hiking, stair stepper, or anything else that interests us. We only must find a way to incorporate this into our lives in order to avoid the sudden decline in Americans health. Getting involved in fitness can help you enjoy your life more and be more active.