In today’s highly competitive market, developing new products, processes, and services is one of the most effective ways to give your business that all-important edge.
But diversification isn’t always a no-brainer. Here’s how to assess whether or not you have a viable market opportunity for expansion, and how to set yourself up for success as you roll out your newest venture.
Identify market gaps
“These days, quality is expected just to get in the door, and lowered pricing indicates a lack of understanding of what’s important to the buyer, B2B or B2C. Growth, smart growth, delivers a competitive advantage to SMBs,” says Seena Sharp, founder of Sharp Market Intelligence, a competitive intelligence firm. Sharp suggests identifying opportunities by “becoming aware—sooner than others—of what’s changing.” In other words, identify market gaps. “Simply stated, it’s learning to recognize what’s already occurring, which means that there are paying customers. This is better than predicting or forecasting because the risk is reduced,” she says.
Sharp advises turning to successful companies in industries other than your own for inspiration. “They have identified something that the customer wants, and the core concept may be applicable to a totally different industry. This might refer to a feature, alternative use, or distribution channel that’s not expected in a particular industry, customers who don’t fit the target profile, packaging, and more,” she says.
Additionally, pay attention to societal changes that might lead to a new or growing market in the near future. “Obesity has been a main topic for years, yet only a few manufacturers offer wedding gowns or bicycles for this segment,” notes Sharp. “They may be small markets at first, but every large company started as a small company.”
Consider timing, viability, and your motives
Troy Hazard, cable TV talk-show host of “Gettin’ Down 2 Business” and author of the book Future Proofing your Business, has owned 11 businesses in the last 20 years. He notes that when you’re considering expansion into new markets, you have to determine whether the time is right for the market and if the time is right for you. Are you ready to take on all that comes with launching a new business area? Secondly, you need to make sure that your original business—your core offering—won’t suffer as you explore new things. “Don’t make one child sick to save another. If the goal of expansion is to prop up the poor performance of the first location or an underperforming product line in the belief that ‘this one will be better,’ then you are only going to drag both of them down,” he warns.
If you do determine you have a feasible business opportunity on your hands, take a moment to contemplate whether or not it’s a logical extension of your existing portfolio. Is it something your current customer is looking for, or are you tapping into a new demographic? Rely on anecdotal research and hard numbers. The Internet makes researching new opportunities, reaching new customers, and marketing new products or services easier than ever before. Be sure to leverage the real-time data your website provides to analyze your existing customers’ interests. If you expand your company’s offering to new markets, be sure to update your site accordingly—for visitors and for search engines.
Last but not least: “park your ego,” advises Hazard. “More products or more locations on your letterhead is not a sign of good business, a growing business, or of strength. The bottom line is still your most powerful measurement.”
This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.