When deciding to grow your business, you might arrive at the decision to enter a new market as the next logical step. Entering a new market, for this article, is defined as bringing your product or service to a new demographic or selling it for a new use. Before diving into a new market, there is much homework to be done in order to mitigate the risks and reach your business goals. This article covers some of the considerations to make before taking on this initiative.
Set Clear Definitions
To remain consistent as you bring changes to your business, definitions must be set in place. It is important to define the roles in your organization, as well as the policies, processes and core values so the identity and culture of your business remains the same. It is also important to define your current market, as well as any new market you intend to sell your product to.
Research Internal Capabilities
Take a look at the stats and analytics of your business to get a realistic idea of its capabilities. Understand how your business has performed in the past and create models for low, assumed, and high expectations for success. Make preparations for each outcome by planning for projected revenues, gross margins and expenses. Decide how much investment is required, when it will be needed and when it will be available. Analyze the day-to-day tasks of your company and determine which tasks could be optimized. Operationally, you may need to adjust staffing, training, space, I.T., customer service systems, and outsourcing.
Research External Market Conditions
Perform a market analysis, identify target customers, market growth rates, demand forecast, competitors and potential barriers to the expansion. Research all you can about the market you wish to enter by talking to members of that industry. Get to know the target customers and what they want.
Set Goals
In order to realize your progress, it is important to define what the overall goal is for your company and where entering a new market fits in with this goal. In order to measure the success of growing your business, it is important to have SMART goals already in place. Smaller goals will provide guidance when you need to know what steps to take next.
The above steps should be taken before any move is made to expand into a new market. Once new market entry has begun, one more thing we recommend is to:
Remember to Maintain Consistency
It is important to stick to the definitions you originally set down before entering new markets. Do not lose sight of the day-to-day operations of the business as you grow, since this is what brought you profitability in the first place. If you need to hire new team members to keep up with demand, stay true to the quality and culture of your team when hiring. Stay focused on maintaining the same quality of service to your existing customers and be sure to track the retention of your older customers as you grow.