If you’re looking to grow your business, you might consider expanding your service offerings.
Adding additional services can increase your profitability, diversify your income, and expand your market. But there are important things to consider before adding to your income streams.
1. Does the expansion complement your business?
The best way to expand your service offerings is to add value that you already have the capacity for, complements the work you’re already doing, and is attractive to your current client base.
If you offer lawn maintenance, for example, find out what other yard work your clients need done. It might be fairly simple for you to offer those services to your clients, and they’re likely to be happy for you to do it rather than hiring someone new.
2. Are your profits consistently high?
If your business isn’t consistently profitable, it’s risky to spend money hiring new people and buying more equipment.
It might be tempting if you make a lot of money in one year to jump into offering a new service, but hold back until you’ve got a couple of years of high profits behind you. That allows you to save money to cover the increased expenses and ensure that 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 good season.
3. Is there a potential partnership or merger that makes sense?
There are times when forming a partnership or otherwise merging businesses makes sense. Is there someone working in a similar capacity who you could work with? Maybe they are great in their field but need help running a business. Explore a partnership or a buy-out.
For example, if you offer immigration consulting and you know someone who offers relocation services, you might form a partnership so the new company can offer both immigration help and relocation services. That can lead to new clients for both you and your new partner.
4. Are you expanding for the right reasons?
There are many good reasons to add new services, but there are also reasons that can increase your risks. Competition, for example.
Adding a new service just to beat your competitors can lead to mistakes made and money lost. Companies find themselves in trouble when they add services there may be no market for, or without a fully formed plan.
Final thoughts
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.
In your corner,
The GuYDanS Team
