Expanding your product offerings can sound like an automatic win for your Middle Market firm. Increased sales and customers, expansion into your market and gaining a positive reputation are strong motivating factors.
But, is it the right time or the right move for your company? How can you determine if it is better to grow or focus on what you currently offer?
Why Does Expansion Make Sense?
Any decision your Middle Market organization makes likely hinges on “why” and “how”. Why does it make sense? How would it be beneficial? And, why would we invest time, money and resources, etc.? Product or service line expansions are no different. Aside from reasons we’ve already explored, diversification and expansion have some pretty strong motivators:
⦁ Spread risk – if the market shifts, you’ll have a better chance of weathering events with diverse product lines.
⦁ More products = more customers = more reputation. A broader base of customers usually means more recognition and more chances to build a reputation.
⦁ A varied product mix attracts a diverse mix of customers. Thus, you might be able to close some gaps in seasonal sales cycles. Or, capture more income at different levels – high-end to low-end, etc.
While these are powerful reasons why you may decide to expand, they aren’t the full picture.
What Do You Need To Consider?
First, you identify why it would be compelling to expand. Next, you need to look at what needs to be considered, planned for or resolved. Then, in determining if you’ll move forward, think about all the areas of your Middle Market firm that will be affected. Also, you’ll want to think about how your existing customers will respond and how your existing products and services will be impacted. Some other things to consider:
⦁ Is there an actual need for the product(s) – how did you determine this need?
⦁ Is the new product within the umbrella of your existing products?
⦁ Can it utilize the same resources for equipment, production, packaging, shipping, marketing, etc?
⦁ Is it scalable or repeatable?
⦁ Will it improve, detract from or have no impact on your current products?
⦁ Can the market support it? Are there similar products from your competitors?
⦁ Do you have the resources (finances, infrastructure, employees) needed to develop, test, implement and scale the product?
⦁ What changes will it require for your systems, structures, employees, vendors, partners, customers, etc?
Obviously, there are many factors your company will need to consider carefully. As you weigh these factors, it’s important to remember that what seems exciting and filled with potential at the outset won’t feel that way through what could be an arduous process. Spending time delving into every facet of a product expansion is vital to make sure your Middle Market organization wants to go the distance.
What Else Is There?
Possibly during the process of determining your “why” and going through your considerations, you’ll decide it isn’t the right time or the right strategic move for a product expansion. What’s next then? Rather than just scrapping everything, could you take some of what you’ve learned and apply it somewhere?
Maybe you’ve realized it doesn’t make sense to create something new because it would only have been an update to your existing product. At this point, you’ll have done a lot of the legwork towards what would be required for the update, so consider moving forward with it.
Perhaps you will have realized you couldn’t produce the product or support some major parts of the expansion in-house. So, it may be time to think about shifting some of your processes to a trusted supplier or vendor.
Maybe you’ll have realized you don’t have the human capital to create something new – perhaps this is the time to invest in some additional employees and leadership who can take your firm to the next level in the future.
If customers are asking for this product, what can you offer them instead? Or, how do you go about answering their request without the new product? Perhaps some innovation and ingenuity will resolve your issue without taking on a lot of the challenges of product development.
Whether you ultimately decide to expand your product lines or not, spending the time needed to truly explore your options and potential pitfalls will allow your Middle Market organization to view everything from a new perspective, which only benefits you in the end.
So what’s in the Mighty Middle Market for me? — get it right now at www.Go4ROI.com.