As a marketing geek, it’s at this point that I start thinking about strategies to cope with conditions like this. One of my favourite marketing models is the ansoff matrix, don’t worry you don’t need to know it to continue reading this blog. But this matrix details one of the options I think a lot of small business owners are turning to find growth. Diversification; the process of bringing new products or services to new markets.
Bringing new products to market is something I’ve done a few times here at Sage. Over the last few years I have focused my attention, and that of my teams’ on conducting the research needed to bring new products to market, and I’ve learnt a few things I wanted to share.
I’ve spoken to thousands of small business owners in this period; held 1-2-1 depth interviews, run focus groups, networked, held seminars and conducted all kinds of customer / market testing. All of this with one purpose in mind; to answer the questions needed to get to market.
Research, research, research
The biggest piece of advice I could give to anyone looking to diversify their business is to do lots and lots of research. There are so many sources of data and information out there that to not do your research puts any business at a clear disadvantage.
The main question to ask when developing a new product or service is “what problem are we going to solve for customers with this product/service”? Recently we launched Sage One, a series of online accounting services for small business owners and their accountants. With Sage One we’re solving a number of problems; accessing data from multiple locations, helping accountants collaborate and giving business owners help and support outside of normal office hours. All of these problems came out in our research.
What else should you consider?
Once you’ve answered that key question it’s time to think about some of the other questions you need the answers to:
- Can you build a value proposition?
- How do your potential customers currently solve the problem?
- Do you have any competition? What do they offer? How much do they charge?
- How much will customers pay to solve their problem?
- How can you target potential customers?
- What are the risks involved?
- How does this new product or service fit with your portfolio (whatever else you do)
All this is just one part of the concept phase of product development; there are other important processes to go through too. Making sure the financials add up, sizing the market, analysing competitors in depth and fully evaluating risks are key tasks to undertake.
So, is it a good idea?
Finally if all of the above points to the idea being a good one, well that’s where the rest of the fun starts. Planning and ultimately launching a new product is hugely rewarding.
Just last week I spoke to a customer who’s a serial entrepreneur. Jeffery of JRLinton, a small business specialising in electrical goods told me of his new business selling fast food online. After explaining to me how he discovered the market potential he added “I’d forgotten how hard it is to bring a start-up idea to market and how much work is involved!”
Michael Barber, Sage One Team