Growing the business is usually part of any company’s plan. While strategies to grow can take many shapes and forms, there are four basic categories:
Selling more of your existing products in your existing markets, thus taking share from another competitor. This is often the first strategy companies consider because they have the most familiarity with the products and the markets. This often creates direct competition for market share.
Selling new products to your existing customers and markets. The advantage of this strategy is that your company has relationships with its customers and has easier access to them. On the other hand, it can be a challenge to convince them that your company will deliver new products at the same level of quality and service as your existing ones.
Taking your existing products to new customers or markets that can use them or variations of them. Product knowledge is a big advantage here, but this option puts significant pressure on the sales and marketing function of the business. Since you will be entering a new market where your company does not have a presence, the sales and marketing execution has to be great.
Selling new products to new markets. This is clearly the riskiest of the four options as you have no advantage in either product knowledge or market knowledge. This is usually the option to avoid.
There can be many opportunities within these four broad categories. Be careful, though. One of the issues we often see is companies trying to do too many things at once instead of focusing on their best opportunity for growth.
In order to prioritize your opportunities, consider asking yourself:
- How closely does the opportunity fit with our overall strategy?
- How closely does the opportunity fit with our core competencies?
- What is the size of the market/opportunity?
- How attractive is the market for the opportunity in terms of margins and profits?
- What are the financial implications of the opportunity and do we have the capital structure to support it?
- What are the risks to the business if we fail?
Taking a hard look at these six questions may help you qualify the growth opportunities you are considering and focus on those that will provide the highest impact to your organization.
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