Branching Out in Your Home Business Shelbyville TN
Branching Out in Your Home Business
Grow Your Business By Expanding Horizontally
By Christopher J. Bachler
Even if you plan to always work from home, you’ll probably need to expand. You might want or need more money. You might need to grow, just to keep up with your competitors. If nothing else, you know that some of your customers will eventually disappear, and the cost of doing business will continue to rise. So expansion isn’t just an ambitious dream—it’s a real-world necessity!
Business expansion usually follows a “vertical” path, meaning the business will try to sell more of its current product or service. That’s so because the effort usually requires few major adjustments or risks. A retailer who sells men’s suits will always try to sell more suits. If the market is hot, that’s all he needs to do.
But the market is probably not hot enough for him to sell only suits. So the retailer expands “horizontally” by adding shirts, ties, belts, shoes, or any other complementary item that his customers might want. In this way, he not only gains more sales from customers who buy suits, but also from those who might only want a shirt or a belt.
The principle is no different for home-based businesses. A self-employed painter might decide to also market plastering or other services, as well. A seminar planner might branch out into special events planning, awards’ ceremonies, or even office parties.
When Horizontal Expansion Makes Sense
Horizontal expansion makes sense when your “vertical growth” has reached its limit, but you still want to grow. Even when more vertical growth is possible, a point of diminishing returns can be reached when further expenditures of time or money are not justified.
David Frey, President of Marketing Best Practices, ( www.marketingbestpractices.com ) and author of, The Small Business Marketing Bible, suggests that horizontal expansion is best for home businesses whose products or services can be expanded with little cash outlay and risk. “If you have a large and growing customer following and much of your business is brought in through referrals, then offering more products and services might be a good idea since you can expand without all the associated marketing costs. Another good example would be businesses whose vendors can drop ship most of the products to customer, since they won’t need to tie up money in inventory or extra personnel.”
With some exceptions, it’s usually easier to expand product rather than service offerings since product selling tends to require less preparation and involvement than service selling. To add a service, for instance, you might need to learn new skills. Even if you already possess the requisite knowledge, your level of experience in the new area won’t be equal to that associated with your traditional service.
It can also be difficult to frequently shift from one skill to another. Most freelance writers, for instance, won’t find it easy to shift from writing technical manuals...