If you’re a small-business owner specializing in a specific market, you’ve probably considered the pros and cons of expanding your niche. Expanding the scope of your business can seem pretty tantalizing. Before you make the jump, though, there are some important things to keep in mind.
Should You Expand Your Small Business Niche?
The impact – Expanding the scope of your small business can carry with it some impressive potential benefits, like bringing in new customers by broadening your appeal. To do that, though, you’ll have to expand more than your product line. You may have to open a new facility, increase your inventory, expand your production line, add employees, and overhaul your marketing plan. That’s a lot to change, upgrade, and enhance. Before you become too enamored of the upside, consider the real impact of expanding. Beyond basic concerns like where you’ll get the necessary revenue to expand and whether or not the current economic situation works in favor or against the idea of growing your business, is it worth the risk of upsetting the delicate balance you’ve established? If you’re the brain trust of your small business, will you have the energy and passion to undertake an expansion?
There’s something else to consider, too. You may be able to compete successfully in a new niche market in time, but if there are quality control or customer service problems at first, how might a few missteps reflect on your core business — the business that’s doing pretty well right now? If both niches are closely related, they may complement one another in a way that could make it easier to expand, but could also cause negative comparisons you may not expect or welcome.
The perception – If you have a narrowly defined niche you may be the proverbial large fish inhabiting a small pond. That’s a nice spot to be in: It allows you an enhanced status that may not translate to a broader marketplace. It may also allow you to price your goods and services based on a matrix that includes factors like your expertise, a history of providing quality products, and a dedication to “hassle free” customer service. The new niche you select may be inhabited by competitors that already shine in these areas, making it harder for you to sell in a way that’s comfortable and familiar.
The competition – Take a look at what your potential competitors are doing wrong today. Do you have strengths they lack, or are you likely to make some of the same blunders — at least at the start of a campaign? Now, look at their strengths. Can you do better? Can you appeal to a different, growing demographic? Do you have unique insights that will help you succeed?
Exploring these issues should be part of any research you undertake to address the challenges of expanding your niche. The more you know now, the less you’ll have to gamble on — and possibly regret — later.