By Alexandra Lopez-Pacheco, Financial Post – Monday, October 11, 2010
There really are only two ways to grow your business, says Neville Pokroy, principal at Mastermind Solutions Inc., a Toronto-based management consulting company. “You can sell more to your existing customers or go and find new customers. Those new customers may be in your existing market or they may be in a new market.”
While it might seem as if Mr. Pokroy is stating the obvious, he says many small businesses pondering how to grow often fail to do an analysis that starts with basics.
“Many don’t have a clear objective,” he says. “Some will say they want to grow their business by opening new markets. And you say to them, ‘but you only have 2% of your existing market, why don’t you go after customers there and increase your business by 50%?’ It’s much cheaper and easier to sell to your existing customers if you have a broad enough selection of products and services. If you’re looking at new markets, you’re looking at a new set of competitors, potentially a new set of circumstances. Looking at new markets is really one of the last things you do versus growing your share of an existing market.”
The first step a small business should take in developing a growth plan is to conduct a thorough business development and marketing audit. This exercise will help a small business identify its strengths and capabilities as well as the best opportunities to pursue. “Most companies do not see the opportunities out there in front of their faces. There are tons of opportunities but people get so involved in running the day-to-day part of their business that they find it challenging to step back and look at how to take their business in an expanded or a different target direction,” he says.
“The first step is not necessarily where you find new markets, it is how you get more business from your existing market. When do you look for a new market? When you have maxed out your capabilities in your existing market, that’s when how to look for a new market becomes a relevant question.”
Start by examining your company’s capabilities and see where you can expand those capabilities. It could be manufacturing, importing or distributing new products or adding services to increase your market share. “I think that’s one of the most important things, whether you’re trying to expand your reach into your current market or into new markets,” he says. “Because either way, you have to have the ability to service them or develop products to satisfy that particular niche.”
Look at your competitors and see what they’re doing in terms of markets you’re not in.
Consider forming partnerships and alliances with other companies to increase your market share.
Look at similar businesses outside your geographic targets for ideas and apply that thinking toward your market. “You do that by comparing your capabilities and those of your competitors to similar ones in other countries, and see where they’re expanding their markets to and if maybe there’s a similar fit for you in your local markets.”
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