When growth of your current market has slowed, and you are in a good position to expand, finding a new market to target could potentially bring more profits to your company.
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If this is a route you are thinking about pursuing, there are a few things you need to know about expanding to new markets.
What to Consider When Expanding a Business
Who else may benefit from the solution you currently provide? Instead of altering or creating an entirely new product or service, is there another group of people who will make use of what you offer if you were to market to them?
This may save you from dealing with extra costs associated with developing new offerings while opening up your business to a new group of people.
Know what your strong points are and understand the new market you are targeting. Think back to when you first started your business and were originally coming up with who to market to. Were there target markets that you had identified then that might make sense to target now?
Know what you do best and know how to communicate these skills to the new group you are trying to attract. Do the necessary research in order to fully understand this market and their needs. Find out how big the market is, what growth opportunities there are, and how many competitors you will be up against.
What changes and costs will be involved? It is not as simple as just putting out the new product/service in your store or on your list of services. Make sure your planned business expansion will be profitable.
Now that you have a good addition to what you provide, you need to figure out how to get the new customers to come. It may be renovations or additions to the store, new marketing campaigns and a bigger advertising budget, or a completely new business plan. It may be easy to add the new service/product, but how hard will it be to get it to be profitable?
What to Be Careful Of When Expanding a Business
Don't forget about your initial target market. They are your first primary market and are what made your business profitable.
When expanding, make sure not to let this hurt business with your first market. For example, if you own a restaurant that caters to a younger college crowd, think about how it will affect them if you are suddenly changing the environment to cater to an older crowd with more expendable income.
Suddenly, your younger market may not enjoy visiting your business as much if they do not feel as comfortable or can not afford the new menu you offer.
Also, will the new crowd feel comfortable in a restaurant with the majority of business being college kids? Most likely not.
By trying to expand in this manner, you only end up hurting business. Don't lose sight of why you started the business in the first place.
Another one of the common mistakes when expanding a business is doing it too early. Growing too quickly can cause a big problem for a business that is not ready to handle rapid growth.
Take expansion slowly. When beginning efforts to attract new markets, it is a good idea to gradually introduce them to your product or service. This is beneficial to the business more than anything else. Rolling out everything at once may cause you to become in over your head. Slow introduction gives you a chance to feel out how well the addition is going, what to do and not to do, and understand and react to customer reactions.
Listen to feedback. If the new market isn't responding well, consider dropping the unprofitable project or targeting a different or smaller niche. It will only hurt you to continue pursuing a market that does not see a need for what you offer.