For most businesses, the first four stages of the business life cycle (The Idea, Actual Work, Look Out World, and We’ve Arrived) happen with a certain amount of predictability. But now what? What happens when your business has become established in the marketplace with a brand and loyal customers and formal processes and all the other stuff that goes with it? For most business owners, you are faced with a decision. One option is to stay where you are. Keep doing what you’re doing, don’t look for any kind of new opportunities, just maintain, maintain, maintain. Basically, you stay in Stage Four: We’ve Arrived.
For some business owners, that isn’t what they’re looking for. They’re looking for new ideas, new revenue streams, new sources of profit, larger market share, etc. In other words, they are looking for growth, stage five of the business life cycle.
If you want to grow your business, there are essentially four strategies you can take:
- Market Penetration: Existing Products in Existing Markets
- Market Expansion: Existing Products in New Markets
- Product Expansion: New Products in Existing Markets
- Diversification: New Products in New Markets
It’s tempting to invest in diversification. Diversification is one of those buzz words that people talk about as though somehow if you are “diversified”, all your problems will be solved. The reality is that the four options above are listed from easiest to most difficult. Diversification is listed last, so you know what that means.
Remember, when you’re thinking about growth, focus on your Hedgehog (thank you, Jim Collins). Be very careful about expanding into unrelated businesses. Why do you want to be there? Is it just because you think it sounds interesting? How does it complement what you already do? I suggest you focus on opportunities that complement what you already do and who you already serve.
Regardless of which growth method you choose, do the planning and research in advance. Don’t make decisions on a whim. Make sure you understand what you’re getting into before you start down the path. You’ll save yourself a lot of heartache in the end.
What is your Hedgehog? What is one sales/marketing strategy you could implement today to start your business down the path to growth and expansion?