How do I grow my business? Where should I expand? Most business owners and entrepreneurs grapple with this dilemma, while dreaming and contemplating their next breakout, new and innovative business expansion. It is a dream worth pursuing.
In the meantime, do keep in mind that, the less risky approach to expansion entails selling your existing products and services to the people you are already selling to. This is the easiest of the 4 options that are available to you. You can use a valuable tool (shown below) to assist you in evaluating various ways of pursuing business expansion.
Conceptual Framework for Business Expansion
The opportunities you have can be sorted into multiple major categories, which are mentioned below:
Current or New Product/Service
You have 2 options: you can either sell your current product or service to your existing customers or you can come up with a new product that you can offer to existing customers. An example of this is an accounting firm offering investment and retirement solutions decides to grow by selling an assortment of snacks and beverages.
Current or New Market
Again, you have 2 options: you can either sell your products to current customers (more sales per customer) or venture into a new market, which is a riskier proposition.
Interpreting the Expansion Framework
In my opinion, the most viable type of business expansion involves selling current products to the existing market. It is ideal for risk averse entrepreneurs. On the other hand, selling new products to a brand new market is the most difficult and risk prone option and tends to suit those who have a higher appetite for risk. It takes guessing to explore and pioneer business expansion opportunities. There is a greater tendency to make mistakes when we try to push the envelope.
For example, your new product line could require more training than expected. The proposed expansion may end up costing more and breach budget limitations. Penetrating new markets may require novel marketing initiatives and efforts in order to reach the target market. This can mean burning through cash and other resources when mistakes are committed, targets are not met and promotion efforts fail. However, the picture is not that bleak and a business may survive or even thrive when it is pushed out of its comfort zone.
Generation of Ideas via Framework
Pin the expansion framework to a whiteboard, jotting down ideas. Assign the generated ideas to various quadrants using your team’s help. Entrepreneurs and consultants both use this for brainstorming. There are few cases where this exercise of making classifications between current and new business opportunities does not generate valuable and feasible business ideas.
Try making reasonable and informed guesses when you use this framework. It is brainstorming after all, not an exact science. Don’t fret about detailed definitions and instead make good use of common sense. For instance, a restaurant that offers to-go packaging services with its products might not be as different and new as the one that offers delivery too. Similarly, a software company offering new subscription version of a productivity program or software may not be different from a software business offering mortgage loans or printing of checks.
A decision by a company, which sells its products to consumers, to start offering products to businesses is usually considered a transition to a new market. Similarly, a move from small business towards enterprise is deemed as a transition to new markets. It is essential you plan and strategise effectively to facilitate a smooth transition.
Do Not Push Too Far
It is highly recommended that you guard against pushing this advice to its limit. There is no denying that your business needs to look for new directions and avenues for expansion. This framework focuses more on not missing easy and obvious opportunities, compared to not moving ahead.
In particular, this framework assists people and businesses by finding ways of selling more of the current product to existing customer groups. Experience shows that expansion decisions usually boil down to human nature and preferences. Big ideas and their implications are far more fascinating and exciting. People tend to aim high in different contexts and situations, and there is nothing wrong with that. However, with respect to business growth and expansion, moving ahead with the easiest options generally yields better results and favourable outcomes.
If you enjoyed this post, we’d be very grateful if you’d help it spread by sharing it with your friends. Thank you!