It is a situation I come across many times. A good small service business grows to a point simply via word of mouth and recommendation but then gets stuck at a level. Their challenge is how to grow business beyond this level by other means. In this article we cover some of the options.
A quick look at the standard new business development model (Ansoffs Matrix) shows that the two lowest risk options are penetrating new markets with existing services or delivering new services to existing markets. The key to both options is an appropriate to market research and segmenting the market to identify smaller market segments with a need and a reasonable level of existing competition.
It is important to take a step back and look at the current market as a whole. Which parts (segments) of the market does the business currently attack, which ones does it avoid, and why and which ones are potentially available to attack.
Starting with the segment of the market currently attacked is there realistically potential growth available in that segment. If so what are the challenges stopping the business from taking more business? Is it simply a capacity issue, is it the level of competition or is it the lack of a particular product or service.
With this information in place decisions can be made. If the issue is capacity then perhaps a higher price service should be delivered to a smaller subset of the market. If it is the level of competition then what could the business do better and if it is the lack of a service what are the implications of delivering that service. This links to the Ansoffs new service approach.
Taking the second possibility identified by Ansoff, it is then possible to look at the other segments of the market not currently serviced. Evaluate if the reasons for avoiding particular segments are really valid. What are the most attractive segments to attack and research how to attack those segments is a key process.
With market segments identified and researched it is then possible to build a plan to attack the markets and grow business. Success is unlikely to be achieved overnight so it is important to plan the steps on the road and have a base to refer back to when things inevitably slip off track.
It is possible to grow business beyond that which may be secured via recommendation but it requires analysis, research planning and the time and courage to see the plan through. The importance of segmenting the market appropriately cannot be overstated.