Mr. Ouellette, an entrepreneur, corporate director, and advisor to multiple companies, examines four ways to grow your business and what each option requires.
1. Market penetration
The first step for companies looking to increase market share is to find ways to lose fewer customers.
“You have to plug the hole in the bucket, but that's not usually a marketing issue,” Ouellette says. “It's important to deliver on your promises to your customers. If you promise a certain delivery date or a certain level of quality and then don't deliver, it creates dissatisfaction.”
Acquiring new customers is a similar challenge. You need to effectively communicate what makes your company great and deliver on that promise every time a company buys from you.That way you can be sure they're not just one time They are not buyers, but rather repeat customers who become advocates for your company.
“It's not enough to be noticed by customers,” says Ouellette. “You want to be noticed. You want your customers to feel like your product speaks to them about something that's important to them. A need that they really feel deeply about.”
This kind of loyalty helps you expand your market.
2. Market development
Once you are successful in your existing market, you reach a point where your selling and marketing expenses become diminishing returns. That's when you should consider other growth options, such as expanding to another city, state, region, or country. Or you may decide to target a different customer segment or demographic profile. You can also set up new distribution channels. For example, if you sell online, you might want to branch out into selling to retail stores, or if you've been selling to businesses, you might want to start selling to consumers.
No matter what type of company you run, market research is key to entering new markets. You should consider several potential markets before narrowing down your list to two or three for further investigation. “We want to focus on markets that are attractive in terms of size, proximity and growth, but also where we can be competitive as an organization,” Ouellette says.
For the Canadian market, Statistics Canada, Chambers of Commerce, and Economic Development Boards are good sources of data. Export Development Canada and the Board of Trade Commissioners provide excellent resources for businesses looking to export or expand internationally.Once you've narrowed down your choices, you can explore more be familiar with You can conduct research on your industry by purchasing reports from professional research companies.
Ouellette cautions that each market has its own unique characteristics, and what works in your home market may not work in another. For example, the United States is not a single market but a collection of regional markets with different laws, regulations, logistical challenges, business cultures, and consumer preferences.
He says smaller, less competitive markets may yield the best results for first forays.
Once you've decided on some possibilities, Ouellette recommends sending a team to market, led by trusted team members. Rather than relying on surveys or focus groups, your team should show your product to real customers and gauge their interest in purchasing.
“The real test is whether they are willing to buy on the spot or sign a purchase order. If they are, then you have confirmed the feasibility of it. If not. , it turns out it's not as easy as you think.”
3. Product development
Another approach is to develop new products for existing markets. A prerequisite for successful new product development and launch is a deep understanding of your customer base.
“The most valuable asset is not your product or technology, but what you know about your customers,” Ouellette says. “Usually it takes the form of data. But it's also qualitative, informal knowledge about what customers want, need, and prefer.”
There are several ways to develop your product:
Product modification
You can increase the demand for your product by changing certain characteristics such as size, shape, packaging, features, and color. The purpose of these changes is to update the product or to accommodate a competitor's product.
different quality levels
By developing different quality levels, you can appeal to different customer segments. for example, low quality Although the product can target the mass market at a low price point, high quality It could be sold at a premium price to a niche market.
Related products or services
You can capitalize on your product's popularity by offering related products and services. Consumers are more likely to purchase products from brands they are already familiar with. By providing related services, subscription based Relationship with customers.
new product
Developing an entirely new product is difficult, but it allows you to build on the relationships you have with existing customers while building new ones. “They work if your existing customer base is very happy with your current services,” Ouellette says. “They have to believe that the new product is as good as the existing product.”
Developing a great product requires a process consisting of idea generation, research, prototype development, test marketing, and then… roll out. Each step comes with costs and potential pitfalls, so careful planning is important.
When developing a product, it's important that the new product matches what you currently offer. For a restaurant, it could be a line of packaged food. For suitcase manufacturers, that could be backpacks or briefcases.
Ouellet points out that many companies are moving their product development teams elsewhere. This will protect you from getting caught. day to day business problem.
4. Diversification
The final strategy is to sell new products to new customers. This can help generate new revenue streams, especially when industries or regions are facing slow growth or decline. For example, companies serving traditional industries can start looking more closely at emerging industries to find a market there.
Acquisitions and internal growth
When pursuing one of the four strategies described above, you can choose to expand your existing business, known as organic growth, or accelerate the process through the acquisition of one or more companies.
Organic growth means continuing on your current path of expansion, such as increasing sales to current customers, exploring new markets, and developing new products and services.
In contrast, acquisitions provide immediate growth but also involve greater financial and operational risk for the company.
Organic growth typically occurs at a slower pace and usually does not require an injection of capital. Acquisitions, on the other hand, provide faster growth but typically require significant capital to fund the deal and an intensive period of management focus during the negotiation and integration stages.
The choice between these two growth avenues should be based on a careful strategic analysis of the company's strengths and weaknesses and the potential impact of the various growth options.
Acquire another business
Acquisitions provide access to customers, talent, intellectual property, operations and other resources. However, acquiring a company is a complex undertaking that requires time, patience, and expertise to coordinate financing, find the right business, and negotiate the deal.
While these steps are difficult, Ouellette says they are not the most difficult part of a successful acquisition. It happens after the deal is completed and the organizational cultures of both companies need to be fused into one.
“Culture is the thing that managers, especially technically oriented managers, consider the least. One reason is that it can't be measured,” he says. “If you're an accountant or an engineer and you're used to dealing with difficult metrics, it's not always easy to understand the culture.”
“But having a strong culture where everyone is rowing in the same direction is really important, especially in a growing company. Sometimes long term vision. ”
Ouellette says the goal should be to bring your company's culture into that of the acquired company by communicating a clear vision and set of values that define your business. He cautions against underestimating the challenge of changing an organization's culture and recommends: go slowly approach.
expand your business
As your business expands, you'll face a series of challenges to ensure you run your business reliably and that your management capabilities keep up with sales growth.
Proper cash flow management is essential for any growing business. That's because even if increased sales generate profits, maintenance costs can deplete working capital and threaten the survival of the business.
You also need to find one you can trust. hard working Get the most out of your employees. That's not easy at a time when labor is in short supply in many parts of the country. Therefore, it is important not to rush the recruitment process to hire employees.
At the same time, we need to ramp up our operations to meet higher demand. The danger here is that waste can creep in and hurt productivity and profits. By addressing operational efficiency, you can reduce waste, increase profits, and create a more engaged and productive workforce.
of ansoff matrix
Ouellette says these four ways to grow a company are called ansoff matrix. The matrix was developed by H. Igor Ansoffthe person who explained it in influential 1957 Article published in Harvard Business Review with the following title: Diversification strategy.
The diagram below shows four possible product and market combinations for growth, along with different risk profiles.
- The first quadrant is market penetration. Increase market share your present and line up of the product. This is the least risky strategy since you are already familiar with both the market and your product.
- The second quadrant is market development; Bring existing products to new markets.
- The 3rd one, Develop new products for existing markets.
- The fourth is diversification. Introducing new products to new markets. This is the riskiest option as both the new product and the market need to be developed at the same time.
