Use narrow niches to blow through growth ceilings

Gordon Bernhardt started Bernhardt Wealth Management 26 years ago as a solo operator. Today, the company has 10 staff and has changed its business model twice to push through ceilings which would have limited its growth.

“Initially, I did financial planning, helped clients with investments, and sold insurance products,” said Bernhardt. “It took me six years to focus on what we do well and not try to be everything to everyone. Therefore, I quit selling insurance.” He later narrowed his niche to clients with at least a million dollars in investible assets. During that transition, Gordon sold 75 percent of the company’s clients to existing staff – helping them launch their own business – and reduced total staff size from six to two.

Despite being smaller, the company grew faster. “We cut our payroll costs, and within a year we had more assets under management than before. We grew faster because we streamlined our client service process and I was able to focus on the new niche in a more exclusive fashion.”

Gordon’s journey from solo operator to established market player was years in the making. He built teams that specialized in what his company did best. He twice narrowed his niche, launching the company to faster growth. And throughout the years, he updated his business plan and made the entire operation more efficient at serving its clients.

These are the keys to blasting through growth ceilings, whether you’re a start-up operation or an established firm facing stagnation. Let’s explore each of these components of growth and success.

Start off right – have a well-researched business plan

The first ceiling to overcome is development of a well-researched, targeted business plan. Many companies limit growth, gross revenue, and net revenue by never fully engaging in this process. Here are five keys to a great business plan.

• Provide a specific product or service. Don’t reduce your company’s value, dilute its experience, and diffuse its marketing by trying to be all things to all people. Gordon went from selling insurance and financial service products – which everyone does – to focusing on wealth management, then narrowed his services to those valued by high-net worth business owners, executives, and professionals.
• Identify and serve specific target markets. Gordon stopped serving people whose investible assets are under one million dollars – giving up short-term revenue but growing the company faster.
• Establish the company’s mission, tagline, philosophies, and goals. Where do you want to be in five years, three years, and one year? How will you get there? What do you want customers and staff to understand about the company culture?
• Develop a branding and marketing strategy. What will your logo and colors be and what will your website say about the company? What roles will marketing, personal relationships, and public relations play in your success?
• Determine your prices and stick to them. One of the biggest limitations to a company’s growth is a lack of confidence in pricing. Companies which negotiate on price are negotiating their future, and companies which have the lowest prices will get the least profitable clients who create the biggest headaches.

A good business plan is your first competitive advantage over competitors who guess at their prices, aren’t looking long-term, and don’t know their target markets. It also allows you to dynamically adjust to new information and update the plan.

Build the right team

Your most important investment may be your team. This includes direct staff, vendors, contractors, and a referral network. The question is: how do you develop the right team for success?

First, know who should be on your team and why. Start with your staff, from senior leaders down to the newest intern, including 1099 employees. Then consider necessary outside experts like lawyers, accountants, and bankers. Without the internal team, your company won’t produce for clients. Without the outside people, your company will be fine until an emergency hits. You don’t want to be scrambling when you’re sued, fighting the IRS, or need a line of credit.

The second answer is to consider personalities, skills, and experiences. Uber targeted experienced taxicab drivers who wanted a safer, calmer work environment and the flexibility to work their own hours. Tony Piloseno was hired by Florida Paints because of his passion for paint, not because of expertise in any specific area of business. One home service company hires former restaurant managers because they are trainable, hard-working, and appreciative of a good working environment.

The final answer is to develop a process to find and build the team. Do you want highly-paid, experienced staff members who can produce right away, or less expensive people who require more training? Do you use Indeed, your company’s professional network, or a headhunter to find your team members? What sort of mentalities should your accountant, lawyer, and banker have to drive your success?

From co-workers to your inner circle, always surround yourself with the best talent available. Successful leaders know that sevens and eights hire nines and tens – because CEOs aren’t always the expert, but they know how to surround themselves with experts.

Find your niche – don’t try to be all things to all people

Bernhardt Wealth Management blasted through multiple growth ceilings because Gordon did one thing very well: build a company around the strategy of a more focused niche. Success came from developing and implementing a plan, a team, a brand, and a client base around that strategy. His success can be yours because — no matter the industry — your organization is better off with a tighter niche focus. Here’s why:

• Your team’s expertise will be higher – just like the restaurant that has a small menu often produces higher-quality meals than the restaurant that makes everything. Team members will be able to adjust more quickly to client needs and market changes, find new ways to add value to clients, and need less oversight.
• Your gross and net profits will be higher. Better service to clients means they will likely sign new, and perhaps more expansive, contracts. This reduces your marketing and sales costs while increasing gross and net revenue. Additionally, your clients will tell their colleagues about you – colleagues who are most likely in your target markets. This will further reduce your sales and marketing costs while increasing your bottom-line revenue through new clients.
• You may discover new ways to serve your clients. As Jim Collins explains in his short but powerful Turning the Flywheel monograph, Apple’s niche expanded from Macs to iPhones without changing much of their operations but vastly increasing their target markets. Likewise, Amazon started as a book company…and now they own Whole Foods and a gazillion other non-book entities, and founder Jeff Bezos is the world’s wealthiest person.

Apple, Amazon, and a restaurant that adds live music during happy hour all have a core niche – and once the core operation effectively served their niche, they saw opportunities to dramatically increase revenue with the same core operations.

Don’t let ceilings slow you down

When it’s all said and done, your company is only limited by the choices its leaders make. Blasting through growth ceilings is possible through an ego-less, company-focused approach that establishes a niche, puts clients first, and builds the right team to service those clients. Gordon Bernhardt has done it three times – it’s why he’s a leader in the region around Washington, D.C. How many ceilings will you hit – and which ones will you blast through?