Now that you've completed the cost cutting, out-sourcing and cash flow exercises in the last section, you're ready to invest your newfound savings of time, energy, and money in areas that will be beneficial to your business.
Expansion can be exciting for you and your customers. Everyone profits when it's done correctly. (If you haven't yet completed the exercises in Hour 7, do them now. You shouldn't expand your business if these areas still need work.)
Many opportunities for expansion may already exist for your current product line. Analyze your product line and list other products and services that will accent it. Brainstorm for a few minutes. For example, you sell music CDs, and tapes. You could expand by adding CD holders, headphones, CD Players, CD lens cleaners, Books & Videos on popular bands etc.
Your expansion should be related to your core business. If you sell auto parts you shouldn't expand by selling jewelry, even if the jewelry is profitable. Selling such diverse products under one roof makes your customers feel as though they are at a yard sale. They will lose confidence in you.
Whether you're expanding a product line or services, it would be a good idea to survey some of your customers to determine how they would react to the new expansion.
For example, you are running a video rental business. You think it's a great idea to add popcorn, refreshments, chips and dip, and a complete line of appetizers as well as t-shirts, mugs, gadgets, and a complete line of cool products for the "Video Crowd".
By doing this you feel you can sell a lot more products and add to your bottom line. The problem is that you haven't done your homework.
After surveying your customers, you discover that their main interest is videos and they only come to the store for the new releases, which they would you to release more quickly. They also say that the refreshments would be a convenience if your prices were reasonable.
75% of the customers had similar responses. Doing this research prior to expanding would have saved you thousands of dollars in unwanted t-shirts, mugs, and gadgets: dead merchandise.
You would have learned that above all your customers want new releases more quickly, so this is the area you should concentrate on. Plus you'd also know that they will buy refreshments, but only if they are reasonably priced. Know what your customers want, and find the best way to give it to them. Make that your top priority.
Here is a simple checklist to use when you are considering an expansion.
1. Is this expansion relate to my core business?
2. Can I afford it?
3. Will this expansion jeopardize my existing business?
4. Will it be beneficial to my customers?
5. Will I have the time to make this expansion a success?
6. Do I have enough resources to complete it?
7. Do I want this expansion and do I have the patience to implement it properly?
Exercise 1: Expanding Your Business
a. List all the areas in which you can expand your business.
