Expanding Beyond Your Core Business Model

History is laden with examples of businesses that have broadened their repertoire of products and services, yielding both remarkable successes and monumental failures. On the other hand, there is really no such thing as “playing it safe.” Just as many companies have foundered by deviating too far, too fast from their traditional business model, others have lost their edge by hewing too closely to convention, like old dogs that failed to learn new tricks. A famous example of the latter is Smith-Corona, which by the 1980s had firmly established itself as the world’s premier manufacturer of typewriters, only to watch its signal technology fade into obsolescence due to the advancement of the personal computer.

Of course, the prospect of expanding a business model is daunting, and the temptation of risk-aversion is strong. But the choice to “stick with the core” entails its own risks. There are no guarantees. But there are strategies companies can employ that will enhance the probability of a successful transition or expansion.

Assess your current capabilities. Where does your business excel? What can you do better?

If you’re running a profitable business already, it’s a sign that your clientele values what you have to offer. Take the time to realistically determine your strengths and weaknesses as an organization, and where they stack up against your major competitors. Equally important, stay abreast of any new techniques, technologies, and business opportunities that your competitors may be exploring.

In his influential book Understanding Media, cultural analyst Marshall McLuhan advanced the thesis that technology—including tools, vehicles, and furniture (which he broadly defines as “media”)—are effective extensions of the human body and mind, geared toward a particular purpose. Using this concept as a framework for analysis, we can infer that a successful transition from one medium to another requires organizations to first recognize a distinction between what they provide, and the means (media) by which they provide it.

For example, the best restaurants are not exclusively in the business of serving food; they afford customers a social, environmental, and gastronomic experience. The technology corporation IBM is not merely a manufacturer of computers and software; its primary purpose is to facilitate the storage and transfer of vast amounts of information. Computers are a medium which serves that end.

Think about the primary purpose of your business, and the experience you would like your customers to have. Are there easier, more efficient, or more cost-effective ways to achieve that goal? What are the tools, or media, at your disposal?

Seek out windows of opportunity.

Once you have a clear idea of the raison d’être of your business, you can think about broadening the range of products and services on offer. Amazon, which began as an online book retailer, now distributes DVDs, music, and even fashion accessories. Netflix, once a mail-order DVD rental service that came close to bankruptcy, is now a highly profitable video-on-demand website with an increasingly global customer base. Both companies recognized that they were in the business not only of moving product, but of catering to the lifestyles of busy professionals by providing easy, convenient gateways for shopping and entertainment.

Do your research first.

 

Occasionally, the opportunity to open up a niche or neglected market presents itself, if you are fortunate or imaginative enough to find prospective customers who are underserved, or to devise a technique that hasn’t been tried yet. But in most transitions or expansions to new markets, you’ll find an established group of firms with a strong foothold. Invariably, those competitors will tenaciously resist your attempts to siphon away their clientele, and will have the advantages of experience, skill, infrastructure, existing relationships, and inside knowledge on their side.

This is why advance research is so important. Before you embark upon a new endeavour, survey the terrain. Get to know your prospective customers and their needs and habits. Identify and examine the most prominent incumbents in the industry, and understand why they are successful.

If you’ve done your homework, feel confident that you can offer a better deal than what’s already on the table in your target market, have a viable business plan, and have secured the capital and cash flow you need, then you’re ready to make a move.

Establishing Success in 10 Seconds

It’s an old cliché that you only get one chance to make a first impression, but unlike with the opposite sex, if practice made perfect it means that all that time spent practicing amounts to dollars left on the table just trying to get it right. You can read over the volumes of thick tomes dedicated to unraveling the mystery as to what to say to make the perfect first impression, or simply be aware of the fact that a first impression of you is made even before you open your mouth – the implications this has for business are unfathomable.

A couple of compelling theories to consider

In a study out of Harvard, published in Psychological Bulletin in 1992 by Ambady & Rosenthal, it was found that there is strong evidence supporting peoples’ ability to quickly and accurately judge others. So when people tell you that they are “excellent judges of character”, statistically they are, if unwittingly, telling the truth. What Ambady & Rosenthal concluded was that you could know someone for a few seconds, or for a year, and your impression of them would be the same.

In a much less scientifically controlled environment, Art of Charm founder Jordan Harbinger explained on the Bulletproof Executive’s podcast recently, in the context of men seeking women at a night club, that a group of women will develop an impression of a man the moment he walks into the club – or as he charmingly puts it, “the moment he appears on their radar” – and not when he musters the courage to approach them.

What do these examples mean for business?

Haven’t put it together yet?

For years, a lot of emphasis has been put on the importance of, and how much you can know about someone, from their having a firm handshake. Well the truth is just about everything in business, from networking, to the job interview, to landing a major deal relies heavily on everything you do before you even shake on anything.

It was often said that a firm handshake projected confidence and self-assuredness - traits that bosses and CEOs looked for in those they wanted working for them or wanted to make deals with - but the truth is the level of your confidence has been established by others not when you first shake, but when they first lay eyes on you. That means that a job, a contract, or a major deal is signed off on courtesy of communication that is non-verbal; communication that is not interactive, or even intentional.

Networking and unlocking the secrets of non-verbal communication

As superficial as it may seem, success anywhere happens in about 10 seconds and comes down to a few exterior traits. So no matter how lovable you may be, or how brilliant your ideas are, it’s essential to at least master a few surface qualities so that these deeper traits have a chance to see the light of day.

In much the same way that a handshake was once regarded as the way to communicate confidence and self-assuredness, people like Ambady, Rosenthal, and Harbinger are now proving that what you wear, how you enter a room, and how you walk and carry yourself have the ability to project the same thing. Neglecting these facts could be the difference between a payday and planning on not making the same mistake next time.

Ten seconds. That’s all it takes. So don’t wait to work up the courage to connect because statistics show that the longer you wait the more your opportunity to make a perfect first impression slips away. Establishing contact the moment you appear on someone’s radar is just another way to project the confidence they are looking for. So don’t waste time second-guessing your lovability, or your great ideas, because you, in fact, wear those on the outside.

Researching your business opportunity

The success rate of a new business getting past its third year is low. To increase your probability of success, you must ensure that the business opportunity that you explore is financially viable, has a market and that the idea is suitable for your personality. Before you take the plunge, take the time to do some research into the opportunity and see if it’s a right fit for you. . Here are some tips that will help you determine if your business opportunity is going to be successful.

1. Do your market research.

This is the first and most important aspect of your research. Is your product or service something that you would use in your life on a daily basis? If not, then why do you want to get into that business? Remember, your clients want to buy a product that will help them solve their problems. At this stage, you should contact a few prospects and provide a demonstration and get their feedback. Take a deeper look into the market; are there a lot of competitors? How are they doing? Is there space for another competitor such as you? By finding the answers to these questions, you’ll determine if your new business has a market opportunity.

2. What is your business revenue model?

Or in other words – how are you going to make money? Take a detailed look at your business - do you know clearly how the cash is going to come in and how much your prospects are willing to pay? Are the profit margins so low that you can barely make a living from the sale? If you don’t understand where the money is coming from, then you shouldn’t be getting into this business.

3. Know your numbers

Starting a business requires you to not only understand if your clients will buy from you, but also knowing how much it will cost to deliver that service. Once you know the numbers (and you should have already identified how much your clients are willing to pay for your product/service), you will be able to determine whether there is enough of a profit margin for your business to grow. A good tip to determine your start-up costs is to outline all the steps you need to take in order to deliver a product to your client. Then list the equipment or services that you will need. This list should indicate how much those start-up costs are going to be.

4. Seek professional advice

Get some advice from experts and other entrepreneurs related to your business. Do your research on the internet, try to find a forum, or an association that is in your industry and try learning as much as you can. Understand potential challenges or any barriers to entry that new businesses face, any rules or regulations, and as many costs that may be related to your business. It would be wise to spend the money in hiring experts such as a lawyer and an accountant to help you.

Starting a business is very exciting, however, if you haven’t done your homework, you’ll soon find out how stressful it can be. Always seek advice from experienced people and use it to your advantage. It’s best that you make the right decisions early than suffer a major loss down the road as a result of selecting the wrong business opportunity.

Business Plan: Change As Needed

A business plan is a vital management tool. It allows you to create a road map of your business and look ahead while, at the same time, plot the necessary steps to achieve your goals. However, paraphrasing the poet Robert Burns, the best laid plans of mice and men often go askew. How true in business.

The world has learned much from the recent recession. One of the more important business lessons that the recession has taught us is that nothing is guaranteed. How many of us watched as financial giants, titans of the business world, tumbled like a house of cards? Who would have envisioned the swift changes that changed the way we live, not over a generation but over the course of a year or two?

Change is the key. The businesses that best survived the recession were those that understood the necessity of change. A business plan is not set in stone. Rather, as a useful management tool, it should not be allowed to gather dust. Just the opposite. It should be, and can be, changed. Business, like life itself, is a rollercoaster. Even if some of the ride is scary, you can't get off in the middle. You need to be flexible and allow yourself to adapt to new situations.

If you see a new business opportunity, change your business plan to incorporate it. Allow yourself the flexibility to explore new options. Don't be afraid to try new ideas. Sometimes, even bad situations can create new opportunities. If your plan went awry when the markets went in a different direction, turn everything around to incorporate the new reality. You may wake up one day and realize that your goals are no longer attainable. Don't try to change the world to meet your goals. Change your goals to accommodate the world. The most successful entrepreneurs have learned that opportunities present themselves and the winners are those who seize those opportunities. Always use the situation at hand to your best advantage.

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What Should Go in My Business Plan?

A good business plan is more than merely a document. It is a carefully designed outline of your business, a veritable blueprint that accurately describes your business and all its components. Business plans differ in length and detail, depending on the nature of the business. However, there are certain basic elements that a good business plan should contain.

Begin with the Executive Summary. Many consider this to be the most important section of the plan. It provides an overview of the key points of the business. It should contain highlights from all sections of the plan and should be written in an interesting, concise manner, not to exceed two pages. Often, the reader will only read this section. If it doesn't grab the reader's attention, they may not go further.

Follow this with a detailed description of the business opportunity. In simple language, describe what this business will do and why it should succeed. Why are you the right person for this business? What is your vision?

You have done your market research. Put the results into a detailed marketing plan. This section of the plan should demonstrate how you plan to enter the market. How do you plan to promote your business? What are your pricing and sales strategies? How large is your potential customer base and how do you identify them?

Build an organizational chart. Describe the key members of your team and what will be their roles. Include the qualifications of the leading managers, including you. This section should clearly convince the reader that this business will have the team to make it happen.

Follow the organizational chart with a description of the operational requirements. How will the business operate? What are the physical requirements? What types of technology will be employed in the daily operations?

Now comes the number crunching. The financial section should contain a detailed outline of your financial forecast for the first three to five years. The first year should be far more detailed. An investor should see that you truly understand the business. This section should contain cash flow statements, profit and loss forecasts, and sales projections.

Remember that the language of a business plan should be directed to an outsider. Make the plan realistic and believable. Invest your time in preparation as this document may be the key to launching your business.

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