After the 16-hour workdays, eleventh-hour decision making, empty aspirin bottles and half-eaten sandwiches, your business is finally a success--with the revenue stream to prove it. So how do you stay ahead of the pack? Riding the success of your introduction is not an option--you've got to reach new customers and new markets. "There always has to be a next thing," says Bruce Lynskey, clinical professor of management at Vanderbilt University's Owen Graduate School of Management in Nashville, Tennessee.
The key to your next move is choosing the expansion method that best fits your company's product or service, your strengths and weaknesses as a business owner, and the limitations of cash, credit and existing resources. A business taking on a new growth strategy should be walking on steady legs, not looking for ways to avoid unresolved problems. And while growth is the central tenet of business development, be willing to apply the brakes when the expansion rate is too much to handle.
So what's the best way to develop your company? One or a combination of the seven strategies below should be enough to turn your acorn into an oak.
1. Introduce a New Product
It takes imagination and a bit of luck to hit on a new product idea that doesn't distract buyers or make older products seem obsolete. But, as in the case of Greensboro, North Carolina-based Batanga.com Inc., a product extension can also reinforce connection to a brand and create a niche all its own. An internet radio station, Batanga.com launched a companion print magazine called Batanga Latin Music to offer advertisers more ways to reach its young, Hispanic, tech-savvy audience. What began as a one-time marketing piece quickly grew into a separate media property. "We started getting calls from newsstand distributors asking if they could carry the magazine and [from] customers who wanted to subscribe," says Troy McConnell, 42, president and CEO of Batanga.com. In 2004, the magazine accounted for 10 percent of the company's $2.5 million in revenue, and McConnell predicts that number will grow to at least 30 percent in a few years.
While you have to be careful when extending your original product, adding products with little or no connection to your product line can be equally dangerous. Exploiting a trend is tempting, but acquiring new customers is less revenue-savvy than squeezing more from existing customers. "The more you can put through the same sales channel, the more cost-effective it is," says Alan M. Davis, a principal with Revitalization Partners, a Seattle consulting firm specializing in business turnarounds.
Use your existing customer base to vet a new product's potential market value. A survey combined with a free gift can prompt customers to share a wealth of information. Fred Wainwright, executive director and adjunct assistant professor at the Center for Private Equity and Entrepreneurship at Dartmouth University's Tuck School of Business, says, "That preliminary research is essential to getting the pricing right, choosing the right value proposition and developing a product that meets the needs of the market."