Are you looking to grow your business? Considering expanding your service offerings? Adding additional services is an excellent way to increase your profitability, expand your market and diversify your income. But there are essential things to consider before adding to your income streams.
Here are four critical things to keep in mind when you consider adding to your services.
Does the expansion complement your business?
When expanding service offerings, make sure that you’re adding value that will complement your existing work and is attractive to your current client base; this will be the best way to expand. It does take more effort to try and bring in new clients; however, adding something that your existing customers need and that you already have the space for is an efficient way to increase your profits.
If you’re a business that offers lawn maintenance, find out what other yard work your clients need done; maybe they need hedging or weeding for example. It might be pretty simple for you to provide those services to your clients, and they’d probably be happy for you to do so as they have already established a relationship with your business.
Is your profitability consistently high?
It is risky to spend money hiring new team members and buying new equipment if your business isn’t making a consistent profit. As tempting as it might be, jumping in and offering a new service after you’ve made a lot of money in one year is not a good idea. It would be best if you held back until your profits started building up over a few years. This will allow you to save money to cover the increased expenses and ensure that the one year wasn’t an anomaly.
Invest in your business, but only expand your services when your profits are consistently up, not when you’ve had one really good period.
Is there a potential partnership or merger that makes sense?
There can be times when forming a partnership or otherwise merging businesses makes sense. You need to ask yourself whether this will benefit your business. Is there a business out there that works in a similar industry to you or works in something you would like to expand to? Could you work well with them? Maybe they are excellent in their field but need help running a business. You could also explore a buy-out.
For example, suppose you offer immigration consulting, and you know someone who provides relocation services. In that case, you might form a partnership so the new company can offer both immigration help and relocation services. This can result in both of you gaining new clients.
Are you doing it for the right reasons?
There are many good reasons to add new services, but it can also increase your risks—for example, competition. Competition can drive innovation, but it can’t be the only reason to add a new service. Adding a new service just to beat your competitors can become risky. Rushing to provide a service to stay up there with the competitors can lead to unnecessary mistakes and loss of money. Rushing to expand is when companies find themselves in trouble for adding services there’s no market for or without a fully-formed plan.
Final thoughts
Expanding your business is exciting, but it’s essential to consider the issues and risks before committing your energy, time, and money. If you’re adding new services, do so if you’re in a good financial position, your clients want it, and you have the capacity for it.
If you have any questions, feel free to Join the conversation…