Growing Small Businesses

Lesson 3: Getting new business

Enter new markets

At some point you'll either want to grow beyond what your current target markets can support or your efforts with your current target groups will become more difficult and you'll get fewer orders because you've contacted all the easy customers in the group. In either case, it's time to look for new markets, new target groups.

You can, of course, go back to selecting target groups on the basis of their needs, your ability to satisfy those needs and your capability to easily access those groups. But, once you've been in business for a while, you know who will buy from you, what they want and how to reach them - after all, you've been doing it.

Once you've been in business for a while, there are two better methods for identifying new markets than to go back to the beginning. The first is to get referrals from your customers and the second is to look for other target groups which are like the target groups with which you've had the most success.

Getting referrals should be an on-going process but, when you're ready to approach a new target market, you can focus on getting new names from existing customers and you can try to group them to get an idea where the most interest in your products or services could lie. Expanding your market this way has the advantage that referrals will have a higher overall success rate and your approach to a new market can be gradual. Once you have a foothold with the new target group, your other strategies can then extend to new customers in that group.

Approaching a whole new group all at once takes more time and effort but it can be a good strategy if you want to jump to a new level with your business. Where referrals are gradual, this will get you a whole new target group placing orders all at once. You want make the best choice possible here so that you get the most business for your efforts and the way, once again, leads through your existing business.

Analyze where your business comes from. There are two aspects here - where does the biggest revenue come from and where is the most profit generated. You have to decide whether you want to grow primarily revenue or profit. Once you have made that decision and seen where the corresponding business is generated, you have to identify the characteristics of the group that is doing that business with you.

Now you have a good idea of what kind of customers are the key to your success - all you need to do is identify groups with similar characteristics. In our computer supplier example, one of the two target groups of customers were parents and retirees who wanted to send e-mail to family members - if your biggest success had been with that group, you would be looking for another group which had send e-mail to absent people, say spouses of executives.

When your existing business is no longer growing as you would like, you can gradually grow it through referrals outside your target groups or you can look for a totally new group whose member have characteristics similar to those customers with whom you have had the best success. Either way, if you've run a customer -oriented business, you can use your existing customers to lever your expansion into new markets.

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