How do you grow your business?
Let's assume you own a house cleaning company in a growing community. You have 20 employees serving 100 customers. You want to grow "organically" - that is, without acquiring other companies. What are your options?
I think about growth options in terms of customers and offerings (the package of goods and services you provide). Put these into a 2x2 matrix (see diagram at the end of the post) and you find four options for growth. Let's look at each, roughly in order of ascending difficulty.
Growth Line A - More of your existing offerings to existing customers
The easiest way to grow your business is to sell more of the same to customers you already have. Let's say some of your customers have you clean their home once per month, while others have you in weekly. Convert some of the monthly customers into weeklies, and you have grown your business quickly - and fairly easily.
And don't forget the importance of customer retention. It's expensive to acquire customers. Once you have them, you want to keep them. Otherwise, your other growth efforts might be stymied.
Growth Line B - New offerings to the same customers
The advantage of growing along this line is that you already know the customers well. Because you are interacting with them regularly, you will learn of other needs that are not yet met. For example, most of your house-cleaning customers also own cars. You might decide to add car detailing to your services, and market it to existing customers.
Growth Line C - Existing offerings to new customers
This is probably what most folks think of when they think of growth - getting new customers. Often, though, this can be harder than growth line B. Why? Because customers are expensive to acquire. It is often much less costly to expand business with existing customers than it is to find new customers. The advantage of growth line C, of course, is that you already have the products and services ready to go. You are a hammer in search of a nail, as it were. The house cleaning example is pretty straightforward - if you are cleaning the house at #1 Trivet Lane, you walk next door to #3 Trivet Lane and sell your services there, too.
Growth Line D - New offerings to new customers
This is the toughest way to grow. Not only do you need to develop a new product or service, you also have to find new customers. Not surprisingly, this growth track can also be fairly risky. It's totally uncharted territory. However, if you hit it right, you might hit it big.
For example, you might decide you want to sell operating room disinfecting services for hospitals into your mix. In that case, you will need to develop the capability to disinfect operating rooms, and you will need to convince hospital managers you can do the job. Tough!
It can be done, though. Nokia is a great example of growth along line D. Did you know that Nokia was once a maker of rubber boots and forest products? Yep, it's true. The move into cell phones, for them, was a Line D play that paid off handsomely.
SO, WHAT TO DO?
As you are plotting the growth of your business, work through each of the four possible avenues of growth. What are the opportunities to increase sales of existing products and services to existing customers? What are the opportunities to offer different products and services to existing customers? Where will you find new customers for existing products and services? And what Line D plays might be lurking in your future?
