By Ben Rand
Growth is risky. It requires the investment of resources—money, people, time—with no guarantee of success. Selling often requires more working capital, more inventory, more manufacturing capacity, new equipment, new facilities, more people, etc. Such investments can tax a company’s resources, management and culture. Is it any wonder that many companies choose not to grow?
Of course, not growing is even riskier. Every successful product has a lifecycle of growth and decline, which, granted, can sometimes take a long time. Perhaps this lifecycle can even be extended by periodically making changes and improvements to the product. Operational efficiency can further extend your profitability, but you can never save your way to growth. In the end, it is not a question of “if,” but only “when” the inevitable decline will occur. Companies that fail to add new products and/or markets to replace declining ones will ride those aging products and services down and ultimately go out of business. This is the fate of most long-term lifestyle businesses.
But deciding to grow and actually doing it are two different things. Many companies hope to grow sales, but often they have no concrete plans; good intentions are not enough.
Selling more into your current market is often what we hear from companies that have no real growth strategy. In reality, growing your market share—unless you are selling a relatively new product—can be especially difficult. To succeed, you will need to revamp your value proposition and marketing to make a stronger case in order to drive additional sales. Another option is to revamp your sales effort, perhaps by shifting to direct sales or adding more resources or new resources that can generate additional sales.
The new-customer strategy means entering new markets and/or new territories. If you pursue international export, it may entail translating your marketing materials and product information, deciphering regulatory and import/export requirements, or establishing relationships with foreign distributors or sales representatives. If you pursue new domestic markets, you will still need to invest in marketing to understand their needs and analyze the competition to ensure that you craft a value proposition that will succeed.
Selling new products to your existing customers puts a premium on new product development, which will entail ideation, research, development and marketing support. This can be particularly challenging for small companies that do not have a true product development process. Another option would be to take advantage of your customer relationships and distribution network to source other products that you can bundle and sell to those existing customers. This strategy will put a premium on your supply chain skills and perhaps call for licensing, partnering or even joint venturing capabilities.
The most important step you can take is recognizing that in today’s world, you cannot “stand pat.” Over the long-term, companies either grow or die. Which will yours do?