4 Things to Consider Before Expanding Your Service Offerings
If you are looking to grow your business, you might consider expanding your service offerings. Adding additional services is a good way to increase your profitability, diversify your income and expand your market but there are important things to consider before adding to your income streams.
Here are 4 important things to keep in mind when you consider adding to your services.
1. Does the expansion complement your business?
The best way to expand your service offerings is to add value which complements the work you are already doing and is attractive to your current client base. While it takes more effort to bring new customers in, adding something which your current clients need and you already have the capacity for is an efficient way to increase your profits.
If you already offer lawn maintenance, find out what other garden work your clients need done, it may be fairly simple for you to offer those services to your clients and they’d probably be happy for you to do it rather than hiring someone new.
2. Is your profitability consistently high?
Spending money to hire new people and buy more equipment if your business isn’t consistently profitable is risky. It may be tempting if you make a lot of money in one year to jump into offering a new service, however consider holding back until you have a couple years of high profits behind you. This way you will have the additional time to save money to cover the increased expenses and ensure the one year wasn’t an anomaly.
Invest in your business, but expand your services when your profits are consistently up, not when you’ve had one really good period.
3. Is there a potential partnership or merger which makes sense?
There are times when forming a partnership or otherwise merging businesses makes sense. Is there someone out there who works in a similar capacity you could work well with? Explore a partnership or a buy-out, maybe they are great in their field but need help running a business?
For example, if you offer immigration consulting and you know someone who offers relocation services, you could consider forming a partnership so the new company can offer both immigration help and relocation services, this way leading new clients to both you and your new partner.
4. Are you doing it for the right reasons?
There are many good reasons to add new services, but there are also reasons which can increase your risks. Competition, for example. While competition can drive innovation, it’s not the only reason to add a new service and doing so just to beat your competitors can lead to mistakes being made and money being lost. Rushing to expand without a fully-formed plan is when companies find themselves in trouble for adding services there’s no market for.
Expanding your business is exciting, but it’s important to consider some issues before you commit your time, energy and financial resources. If you’re adding new services, do so because it makes sense, you’re in a financial position to do so, your clients want it and you have the capacity for it.
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The 2 Peas Team
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