Is Specialization a Smart Move for Small Businesses?

Shalom Solomon 26th March, 2021

Specialization is the process of becoming an expert in a particular subject or skill.

Specialization is the process by which a person develops expertise in a particularly field of study.

These are dictionary definitions of specialization culled from random sites on the internet.

In the previous post though, we defined Specialization in business as the focusing of the resources of a business entity in the production and/or offering of particular goods or services.

Specialization can be a great business strategy if done right. If not done properly by checking all the right boxes, you'd end up wasting your resources and a great deal of effort without tangible results.

In the last post on specialization, we discussed in detail the procedures you need to follow to determine the right business niche to Specialize in.

A Recap

If you've not read it, here's a summary:

You'd need to ensure that you have extensive knowledge, experience and expertise in the niche you're considering.
You'd need to be passionate and enthusiastic about the niche in question, as passion would be the driving force that propels you to keep learning and aiming for higher points in your business.
Finally, and most importantly, you'd need to ensure that whatever niche you're considering has a market size big enough to support your business and give good ROI.

Types of Specialization

If you're considering specialization, there are two ways in which business can choose to Specialize their resources to serve their customers better and increase productivity.

1. Vertical Specialization

2. Horizontal Specialization

1. Vertical Specialization

In vertical specialization, you focus all your business resources, goals and objectives to meeting the needs of a particular group or niche of people. Let's say you are passionate about educating children with disabilities. You can start a school that caters specifically to the educational needs of blind children in Nigeria. Now, the parents of a blind child would prefer to enroll their child in your school over a regular school. You've successfully narrowed your market size, and consequently reduced the size your competition. You've also channelled your resources into a specific niche thereby offering efficient and top-notch services to clients.

2. Horizontal Specialization

This type of Specialization focuses on a particular problem. That is to say, your business provides solution to a certain problem that cuts across a number of different niches, sectors and industries.

A digital marketing strategist for instance that creates SEO driven content for all kinds of companies, blogs or websites. Or a web development business that creates and designs websites for all kinds of businesses.

And there is a third type of specialization, that is a hybrid of both the horizontal and vertical specialization. Where the business can solve a particular need for a niche.

Photo Credit: Pexel

Now, is Specialization a Smart Move for Businesses?

Yes, Yes, Yes

Specialization is always a smart move for any kind of business; both small and big. Ensure though that you have ticked all the necessary boxes and found the right niche to specialize in. If you've done that, then put in the work and watch your business become a trend setter and hopefully churn good Return On Investment (ROI).

The good thing about specialization is that over time, you can decide to decentralized your business when you've gathered enough resources to manage a larger market size and the competition also.

I'll end with the popular qoute which I've paraphrased a bit for this topic,