No business today can remain at the top long without having to adapt. For some businesses, this can mean making minute adjustments to their current product or service lines. For others, this may mean a complete overhaul with the introduction of a new product or service to better meet customer demand.
Though it can be beneficial to try new things, some business leaders may not see the value in implementing changes if their current offerings are performing well enough in their market. However, expanding a product or service line is a move that can help a business remain competitive or even get ahead of others in the industry.
To help businesses introduce changes in a sustainable way, 14 Forbes Business Council members each offer one factor leaders should consider to determine whether the company should expand its product or service line.
1. Mission And Value Alignment
Before expanding your offerings, consider if it will align with your company’s mission and values. A complementary product or service that adds value to your target audience can be a smart move. If the new product or service complements your existing brand, it’s more likely to succeed. Additionally, if it provides added value to your target audience and helps you stand out, it’s worth it. – Michael Shribman, APS Global Partners Inc.
2. Market And Consumer Behavior Trends
Analyze market and consumer behaviors trends in your industry. Doing this can help you identify gaps in the market that you could fill with a new product or service. If there’s no clear market demand for a new product or service, it might not be the right time to expand. Conversely, if your research indicates strong potential demand, it could be a great opportunity for growth. – Jeremy Bradley-Silverio Donato, Zama
Too many businesses seem to be so worried about the question of whether they should expand that they seem to forget a more critical one: “Can I expand?” Broadening your scope can put your current operations at risk. You might have to stretch your team unreasonably thin, hire too quickly and outsource some tasks, which can jeopardize quality. A deeply held belief of mine is to only do something if you can do it well. – Veronica Buitron, TangoCode Inc.
Make sure the math adds up. Don’t just expand for the sake of expansion or because the CEO wants to. The data has to make expansion make sense. If the data says it isn’t a good idea, don’t move forward—or at least don’t move forward in the same way. Aside from that, don’t just copy what a competitor is doing. Work toward doing something better than what a competitor has to offer. – Ty Allen, SocialClimb
5. The End Goal
Identify the goal and what growth you hope to achieve by expanding your business’s products and services. Consider the needs of the customer before the needs of the business. Is the motivation for expansion driven by previous successes or customer demand? Determine whether the motivation for product or service expansion will ensure you expand in line with your business and customer values. – Chris Coldwell, Quicksilver Software Development Inc.
Assess potential profitability before expanding your product or service line. Consider production costs, pricing, market competition and projected sales. Ensure alignment with business goals and financial objectives. Conduct a detailed analysis to determine what sustainable profitability would look like. Put profitability first. – Henri Al Helaly, Skytex Aero
7. Potential Risks
Expansion is considered to be a prudent business action. It may be wise to keep in mind the risks associated with changes that may disrupt an otherwise stable customer base, pipeline of work and digital currency. Leveraging AI enhancements to support this expansion for potential profitability or loss will be helpful as well, in addition to acting accordingly to projections. – Paul L. Gunn, Jr., KUOG Corporation
8. Future Relevancy
One primary factor a company should consider when looking to expand their product or service line is future relevancy. Determine what is relevant today and what will be relevant tomorrow in terms of customer expectations and demand. Evolution is a fact of life in business. If you are not growing, you are dying, and the same is true of your product or service offerings. – Matthew Davis, GDI Insurance Agency, Inc.
9. Your Team
Once the decision is made to expand, rather than the ultimate driver of success being your team’s SWOT (strengths, weaknesses, opportunities and threats) analysis or net present value, it is your striker group or the right team to make it happen. Seasoned executives will tell you that the top two contributors to growth actually do not involve anything quantitative, but they do involve higher degrees of motivation and putting reputation above the bottom line. – Matthew Wong, Tolunay-Wong Engineers Inc.
10. Customer Metrics
Focus on customer happiness in product or service expansion, analyzing needs and preferences. Expansion should resolve pain points or add value. Use metrics like retention rates and net promoter scores to monitor success. Happy customers boost revenue and brand loyalty. – Ian Wilding, Hangar 75
11. Market Demand
When considering expansion, it’s essential to assess market demand. Survey existing customers, study industry trends and gauge the scalability of your business resources to ensure sustainable growth. – Vikrant Shaurya, Authors On Mission
Make sure that any new product or service you introduce is in line with your existing products, brand and the needs of your customers. It’s essential to avoid hastily adopting irrelevant trends that quickly lose their appeal and don’t stand the test of time. Instead, prioritize evaluating the demand and ensuring that the product or service has a satisfactory shelf life. – Yasmin Walter, KMD Books
We typically study our competitors in key markets, assess technological advancements and client demands and analyze internal and external data. If we come across an interesting technological development, for example, we try to determine whether there is potential demand for new services in our current pipeline of projects. We then weigh the potential cost and benefit and make decisions accordingly. – Luca Rovinalti, Svet Solutions Media
14. The Impact On Resource Allocation
One of the most important considerations is the impact the expansion will have on resource allocation. In most cases, the initial phases of product or service expansions are often resource-heavy. Therefore, it is important for the organization to consider if they have enough in reserve to fund the expansion without jeopardizing the operational efficacy of the entire business. – Erik Pham, Health Canal