Each year for the past several years, I’ve run a series of articles throughout the year on a single main topic and this year’s topic is devoted to growing your business.
Economists differ on their predictions for 2024. Some are still saying there’ll be a recession—mild or serious. Others say that with inflation coming down and interest rates likely to begin declining, the forecast economy is pretty good. Who knows which way things will go? For businesses in a solid position now, it could be time to think about growth. One way to do this is by expanding your offerings…adding new products and services. What are the implications for doing this?
Why offer new products and services?
There are several good reasons for expanding your offering:
- Increase sales to existing customers. You already have a customer base. By adding products and services, you have more to offer them and can capture more revenue.
- Attract new customers. They may not have an interest in your existing offering, but they may want or need your new products and services.
- Buffer against market swings. Having a broader range of products and services can make you less vulnerable to changes in the marketplace specifically as well as in the economy in general.
- Cost-effectiveness. The profit margin on items can be boosted because fixed costs are spread over more products and services. Assuming you don’t need additional warehouse space for new goods or additional staff for new services, your rent and other fixed costs are carried by a greater range of items.
- Beat the competition. If you’ve been going head-to-head with certain businesses, you may get ahead by offering something they don’t. This will help to differentiate you from your competitors.
How to proceed?
Before you invest in new goods or services, be sure you think things through carefully to see whether your efforts—and any financial investment—make sense. While there’s no guarantee that even with great planning you’ll see anticipated returns from expanding your offering, but you may very well fail if you don’t plan ahead.
- Do market research. Determine if there’s a need for your proposed additional products and services. Talk to existing customers to get their feedback. See what competitors are offering. Test your offering (think pilot programs, soft opening, etc.).
- Determine how and where you’ll sell. Will you expand through online sales? Will you move into new markets, such as those overseas, and do you understand those markets? Do you have to deal with any regulatory issues for your new offerings and are you prepared to do so?
- Revise your marketing plan. Needless to say, you’ll have to let your existing customers know about your new offering through targeted marketing campaigns. And you’ll need to publicize to the marketplace what you have to offer. Will you launch social media campaigns? What do you need to change on your website and social media platforms?
- Plan your budget. The expansion of your offerings likely will require some financial outlays (e.g., the cost of new inventory items; new marketing efforts). Be sure your current budget is flexible enough to underwrite your investment and carry you until your new offerings generate revenue.
- Consider additional training for your staff. Do they understand what the new items are all about? Can they effectively deliver on the new services? To be sure your staff can handle your growth, you may need to train them. You may even need to hire additional staff (perhaps not initially, but as your meet your growth targets).
“Growth is painful. Change is painful. But nothing is as painful as staying stuck where you do not belong.” — N.R. Narayana Murthy, Indian billionaire who was one of the seven co-founders of Infosys
The start of a new year is a time for optimism, and it may also be a time for you to think about growing your business by offering new products and services. Think about it!
For more blogs written concerning the economy and your business, read here.