How to Diversify Your Company and Tackle New Industries
Offering related services can bring your firm new customers and added revenue. Here are four tips for making it all happen.
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My life as an entrepreneur did not start out so glamorously. After being rejected for a job at a pest-control company, I rallied 10 of my buddies and started my career selling pest control door to door. Our first summer of sales was spent living and working out of a trailer and bathing in a swimming pool. Our paychecks weren't anything to be jealous of in those early days. But when you have an idea you truly believe in, small sacrifices like that are entirely worth it.
Fast-forward almost 15 years and the company that started in a trailer is now Vivint, a large home-automation services provider in North America that was acquired for $2 billion by Blackstone Group in 2012. Its growth would have been nearly impossible had we not made some key changes and additions to our offerings along the way. From having shifted the company from selling pest-control services to providing home security, and then entering the home-automation and solar-power arenas, we've learned a lot about how to embrace the changes that can drive a company's expansion success.
Here are four pointers for any entrepreneur considering diversifying a company:
1. Ensure that the new offerings create value for the customer. The best ways to diversify a company will always focus on providing the most value for the customer. We started off selling pest control, but our long-term vision was always to provide a technology-based service because we knew that would be more valuable to customers. We saw an upside to home security because it had more relevance for homes and families. In pest control, we could provide a service just once or twice a year that was somewhat valuable. But with home security, we could provide a fundamental service that customers needed and used every day of the year.
2. Be an expert in the market that your company is expanding into. Once we had an idea that we knew would increase our company's value to customers, we had to make sure that providing that product or service fell within our realm of experience and expertise. Not all interesting ideas are worth pursuing, especially if a company doesn't have the systems and teams in place to implement them. It's important to ask, Do we know how to deliver this service to consumers? Does it fit? We saw a huge potential for growth in the underserved home-technology market. And we were able to successfully enter and expand within that market because we knew it would align with our door-to-door sales approach and overall business model.
3. Build on your strengths as a company. Selling pest control services was not going to be our sweet spot forever, but it did play an important role in our building up a strong sales force and developing an effective business model until we were ready to make a move. Likewise, having a strong base in the home-security field made expanding into providing home-automation and solar-power services a lot easier. By building on strengths that our business already had, it was easy to explore and then implement completely new ideas for growing our company.
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4. Have the right people in place. Before extending a business in any direction, a company needs to prepare its team completely for the transition. As we branched out into new areas, we added key talent to strengthen our teams and provided training across all departments.
These changes ended up affecting not only our employees but also our customers across North America, so it was crucial that our messaging was clear and cohesive from the top down. We've also learned that the best way to bring customers on board with our new direction is by generating a lot of excitement among our employees. The more passionate and informed employees are about a change, the more the customers will be as well.
There is a natural inclination to maintain the status quo as a business. It's safe and risk-free. We have realized, however, that the most successful businesses are not afraid to do things differently. With every change and expansion we make, we want to reinvent the industry and do things no one has before.