Use these tips to branch out of your market and into new ones, without getting stuck on a limb.
Most businesses will try to grow upward, by seeking more customers and more volume. But a business can also grow out, branching into related markets, and initiating new product lines that might appeal to existing customers.
Here are five tips for growing your small business revenues by reaching into new markets.
1. Stay Close to Home
When a business expands into a new market, there’s a certain logic that typically applies. A bike store decides to sell climbing gear. A restaurant owner opens a bar across town or even a food truck. In almost all cases, this strategy of staying close to home is a smart way to go, and brings less risk than expanding to more distant markets.
2. Read Up
Longhorn Organics in Heath, Texas started out handling the aquatic needs of public zoos and aquariums. A sluggish economy sent the owners looking elsewhere, and they tapped into the budding sustainability industry as a place where their skills might be of value.
But when Holly Dempsey started talking to potential customers, she didn’t actually know how her product would help them. “I knew what we were doing, but not how to translate that to other markets,” she says. Rather than plow ahead, Dempsey pulled back, taking a full year to research her target industry and dig deep into her own firm’s strengths. Studying up helped her to move into the new market with strength and confidence.
Related: 5 Keys to Market Research Success
3. Bring Them With You
The natural base for your new business line is your old business line. Not all of your existing customers will have a use for your new product, but for those who do, you want to be visible. Promote your new store in your old store. Invite existing clients to try the expanded line with coupons and other promotions. Very often this built-in base will be a strong starting point for launching a business into a new market.
4. Hire Smart
Nihar Suthar opened Hype Up Your Day as a clothing designer, fashioning motivational t-shirts, sunglasses and other products. Then the firm made a lateral leap: The same corporate companies that bought his t-shirts came to him asking for HR help, assistance with things like employee retention, motivation, and productivity. He was happy to help, but first he needed to bring skilled hands on board.
“Find the right expertise,” he says. “This is often the biggest challenge that businesses face when expanding to new markets. They have great ideas, but they lack the expertise and talent for the market they intend to get into. Make sure to find the right people and expertise that will make your business successful in the market you plan to expand into.”
5. Leap Sideways
Following the usual logic—when expanding into a new market, stay close to your original idea—Sarasota, Florida, uniform shop Children’s World Uniform added a toy store to the mix. But then the store bucked conventional wisdom, adding a U.S. Post Office inside the store. Seems like a reach, but it has served the business well.
“Sometimes, you want to do something completely out of the box from what your business is currently doing,” says co-owner Tim Holliday. “While this has absolutely nothing do with our core business, it made sense for us, in that it brought people into our store who would otherwise not likely venture in. From that, we’ve been able to sell a lot of toys and games to postal customers for themselves, and for their kids and grandkids. We’ve also been able to sell uniforms and promotional products to local business owners. Sure, some of these people would have been customers of ours without the Post Office, but many made their first trip into the store to mail something or buy stamps.”
Here’s an example of how not to leap sideways. “A few years ago I handled the press advertising for a furniture store. One of the directors said to me one day: I want an ad for ladies’ tights. Seeing my confusion, he added: A friend of mine has just offered us 10,000 pairs at a ridiculous price. I tried desperately to explain that customers would only be confused by a furniture store suddenly promoting female fashion,” says Gordon Veniard, a management consultant and author of numerous business titles. “Nobody—nobody!—came in to buy. He probably still has them in his lock-up!”