The panacea is business growth. The question is how to get there: through new markets or new products?
My initial business advice emphasizes that it is easiest to move into markets and products that are as closely related to your current offering as possible. For example, say you currently sell a cancer test to hospitals. The easiest way to expand is to develop another test utilizing the same technology that goes to the same hospital market. This leverages both your technical knowledge and resources and your critical, hard-won market knowledge.
However, there comes a time when expanding your current technology base to an existing market won’t yield much growth. So, the question for your board of directors, management team, mentor and/or business coach is: where do you go next? The choice is whether to expand the range of products based on the company’s technical expertise, or based on your current market’s needs, which would leverage your brand.
In my experience as a business consultant, I have observed that it is very tempting for a technical company to expand the products utilizing the same or similar technology. However, a critical question is: Who will buy these products? Do they know you? Will they buy from you? Do you really understand what that market needs? And, how will you sell to that market? If you sell with a direct sales force, it is very time-consuming for them to visit a different types of buyers in a variety of markets.
It is tougher to develop a new technology than stick with the proven one, and the company needs to be very realistic about this. However, it is critical to develop a product for a market whose needs you understand. Your chances of developing a product that will sell are exponentially. In addition, your company has a proven ability to sell into that market. You know the buyers, the decision-makers, the buying process and the relationships are already there. The selling cycle is a lot shorter this way.
One note of warning: A completely new product or market often promises high growth. However, it is important to weigh the risk. What don’t you know? Do you even know what you don’t know? What expertise will you need to hire to cover off the lack of knowledge. And then you depend on that knowledge source. How do you know they are wrong? That needs to be thought through.
Tove Rasmussen, Business Coach and CEO of Partners Creating Growth, offers business expertise worldwide to help organizations grow, and disadvantaged regions thrive.
Photo credit: Dorine Ruter