Figuring out how to position your startup business in exactly the
right market segment was accomplishment enough. Your new business has
done well and grown, confirming all the hard analysis you did in the
Now, it might be time for you to follow up
that performance with an encore by considering expansion for your
business into an additional product or service segment, a new
demographic slice of the marketplace, or even a brand extension or a
second brand altogether.
You’ll have to do a lot of
analysis again to figure out whether your balance sheet, your startup’s
infrastructure, your own executive time and other factors would allow
you to make such a leap at the moment.
Follow the path of least resistance
most sensible option for diversification is usually to move your
business into a segment or a market that’s clearly adjacent to what
you’re already doing.
That might simply involve finding
other groups of customers who might buy the same thing. “The more you
can make the new niche markets like your original, the easier it will
be for you to relate to them and convince them that you are eminently
qualified to serve them,” says Larry Mersereau, a Valparaiso,
Ind.-based sales and marketing consultant.
did just that when she realized that there were tons of consumer
equipment going into landfills, in addition to the corporate computer
waste that is recycled and destroyed by Techway Services Inc., her
company based in Grapevine, Texas. So Techway has incorporated a new
business that simultaneously diverts consumers’ computer equipment from
landfills and raises money for charities.
Jump on an obvious business opportunity
success of your business will create chances for diversification that
you may not have foreseen – or at least bring to fruition some of them
that you hoped would develop. When that moment occurs, you must
For Heidi Flammang, the realization hit her
once she had thoroughly established her Camp Bow Wow brand of “doggy”
day and overnight camps and found great demand last year when she
decided to franchise the business concept. The founder of the Boulder,
Colo.-based business already has sold 140 franchises nationwide and
grossed nearly $5 million last year.
Next act? Flammang
has launched a line of retail products like backpacks, stuffed animals
and squeaky toys that follow the “mountain-lodge” theme of Camp Bow
Wow. And she’s going to retail them in the lobby space of the company’s
camps as well as online. “Each camp has 1,500 to 2,500 customers that
come on a regular basis and are huge dog lovers,” Flammang says. “It
was obvious what we should do.”
Come up with a new brand to create appropriate distance
may want to move consumer perception of your products upscale or create
an opportunity for a new line that would be related to, but
differentiated from, your initial lineup. The best way to do that might
be to create a second brand, from name to packaging.
what Anthony Sosnick did after his Anthony Logistics for Men brand of
personal-care products proved to be a big hit out of the box. Some
consumers complained that it was pricey. But Sosnick, founder of the
New York City startup, wanted to maintain the brand’s premium image and
vast product selection. So he created another brand, Anthony Sport for
Men, which offered lower prices and narrower selection.
Kathi Johnson had operated Charmant, a women’s casual clothing boutique
in Albany, N.Y., for a dozen years but began to see sales shrinking due
to competition. So she decided to plunge into the world of consignment
with a new store. But she named it New 2 You instead of using the
Charmant brand, and potentially confusing customers.
Listen to what your customers are asking for
to what your customers are telling you they want, and you may find big
new opportunities for your business. They know you already, so you
don’t have to sell yourself to get in the door or to persuade them that
your new segment is worth a look.
will be direct and ask you to consider adding a line of products or
services. That’s what happened to Justin and Carmen Kennedy at Imagery
Media, a New York City startup business that specialized in online
“advergames” for big marketers. Then Canon, the camera and copier
manufacturer, approached the Kennedys about coming up with some
online-training modules for Canon employees. And now this is the
fastest-growing business segment for Imagery.
Our Bottom Line
Success begets success, so it could be natural to look at expanding
your startup business through an additional product or a second brand.
In so doing, concentrate on the market opportunities that are most
adjacent to what you already do well.