You own a business and you’re looking to grow. Many business owners reach to new products or services as a strategy for growth but, if you’re not careful, that can actually backfire on your business.
Don’t let a new product lessen your ultimate profitability. There are some key things to keep in mind if you’re thinking of expanding what you do.
1. Don’t lose your focus
Your concentration is on developing a new product, but be sure everything else is running smoothly. Your core business shouldn’t fall through the cracks now that your focus is pulled in another direction.
One way to avoid this mistake is to assign a staff member the responsibility of launching the new service while you supervise the project. This way, he ore she can handle the day-to-day tasks while you stay focused on business as a whole. It can also help your team members get excited and have more buy-in to the new product now that they’re involved.
2. Don’t let existing sales decrease
There’s a reason your business has gotten here and it has a lot to do with the products or services you started with. Don’t forget about your existing products that are already successful; this is what will give you the means to launch something new. Don’t let quality, accessibility or excitement of those things decrease while you’re working on something new.
One way to avoid this is to offer incentives that are paired with the original product or service. Maybe there’s a discount for customers who’ve bought from you before. That allows you to thank your current customer base, while getting them familiar with how great your new product is. Or maybe you come up with a package deal that encourages new customers to try what you’re already known for.
3. Don’t let the profit margins of the new product reduce your company’s overall profitability
Be honest about the cost you’ll incur by expanding. Before you price a new product, consider your development costs, production costs and market value. You want a competitive price that will be profitable. This process, you should be familiar with.
But, it’s also important to take your entire business costs into consideration and that includes time, employee power and marketing. How much of your time will this new product require? How many people will you enlist to help? How much can you dedicate to getting the word out about your new plans? It’s important to take all of this into consideration so you’re not overextending yourself or your resources.
Whatever you do, don’t cannibalize sales. The last thing you want is for a new product to negatively impact the old. Rolling out something new might seem like the perfect solution for quick growth but, if it’s not well planned, you could be hurting your business rather than helping it.
Running a business is a challenge. That’s why Wintrust is proud to offer a variety of tools and services to help support you.