What’s the Best Growth Strategy for Your Business?
January 10, 2017
Category: Business Tips
If you’re like most owners of contracting businesses who are looking to grow your sales and profits this year, you may be seriously considering (or are already in the process of) either:
- Entering a new market (e.g. entering the commercial market to supplement your residential business) or,
- Adding new services to what you already do (e.g. adding cabinet spraying to your painting business or adding lawn treatments to your landscaping business).
Or maybe you’re thinking about entering a new market and adding new services. That will give you lots of opportunities for profitable growth, right? Probably not!
To understand why, I want to share with you a simple, but powerful way to think about a growth strategy for your business.
You may find it hard to believe, but when you boil down all the possible growth strategies for your business, you only have four options.
- Do a better job of selling and delivering your existing services to your existing market.
- Target a new market for your existing services.
- Market new services to your existing market.
- Market new services to a new market.
If you put these options together, they form the matrix below that describes your growth strategy options:
So, what is the best strategy option for your business?
First, focus on mastering delivery of your existing services to your existing market
For most companies, the first and most effective strategy that you should consider for growing your sales and profit is to work on improving the delivery of your existing products and services to your existing market. What that means is:
- Creating a consistent and predictable marketing system that delivers enough leads for your ideal target market to predictably make your sales goals.
- Developing a sales and estimating system to sell profitable business with a high closing rate.
- Delivering your services profitably and with high customer satisfaction.
Have you mastered these three critical activities with your existing market and services? If no, then you your best option to grow is usually to focus your energy, time and effort on improving the delivery of your existing services to your existing market.
Enter a new market or add services only after you’ve mastered your current market and service delivery
Attacking a new market or adding new services requires a significant learning curve and adjustment period and will almost always create problems and disruption in your business. Remember all the effort that it took to launch your business? Wasn’t easy, was it? Well, entering a new market or adding a new service will require significant effort, new skills and new learning which will cause major disruptions that will distract you from being effective with your existing market and services.
Think, for example, about a residential contractor entering the commercial market. The commercial market has a different lead generation process, sales process, sales cycle, delivery requirements, and even payment terms and timing. This residential contractor will need to master all of these for success in the commercial market. And that’s a tall order that will take much planning, preparation and resources.
So, my advice to you is to crack the code on your existing services, dominate your current market, and build your customer base first. It is far better to be the best at one set of services for one market than to be mediocre at a menu of services for multiple markets.
Once you’ve mastered your current market and services, then either:
- Enter a new market
- Add new services.
Which one is easier? That depends on a lot of factors, such as how different the new market or services are from your current ones, and what types of skills and experience are available on your team. If you’re a painting or landscaping company, for example, who wants to offer pressure washing to your existing market, that’s a much simpler new service to offer than if you’re a landscape contractor who wants to build swimming pools. Or if you’re a residential contractor who has no commercial experience you’re going to have a tougher hill to climb entering the commercial market than if you have someone on your team who has 20 years of commercial sales and delivery experience.
If you have several options, to decide which one is best for you, evaluate the complexity of the services or market, how different they are from the skill set you have available in your company and the greatest potential profit gain. Pick the strategy with the greatest profit impact that you’re in the best position to execute.
To ensure success you will need someone that you can dedicate to leading the effort. If no one owns a goal or everyone does, it usually doesn’t get accomplished. P.S. You can’t make yourself the owner for everything! You already know that doesn’t work!
Caution: Entering a new market and adding new services at the same time can be detrimental to your company’s (and your) health!
Trying to enter a new market with new services is a very complex endeavor and should not be attempted unless you are a mid to high 7-figure or larger business with significant resources to dedicate to this effort. Even then you should think twice about this growth strategy. It’s the equivalent to launching a completely new business while you try to run your existing business. It can bring your company to its knees. I have seen this happen – even in large corporations – so proceed with extreme caution!
Use this framework when you do your planning!
Most contractors’ that I talk to want predictable, controlled growth in both sales and profit while minimizing chaos, stress and problems. This growth strategy framework gives you a framework to think about your growth strategy to help you achieve these goals while avoiding missteps that can be both costly and disruptive to your business. Use it!
Here’s How We’ve Helped Other Businesses.
Since working with Bill we have gone from losing money to a 6-figure profit and our business has grown more than 20%. It’s incredible. Working with Bill has been a great investment.
Bill’s tools and techniques reduced the struggle and helped me get and retain new customers. While working with Bill, my sales increased 40%, even though the price wars were brutal.
Bill’s constant guidance and insight has helped us make decisions that were instrumental in greatly improving our business and making us happier more fulfilled people.
-Rick Holtz, HJ Holtz and Son Painting
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