Q: As I start working for my family business how can I help the company find new opportunities to grow? Where do I look?
A: Searching for and exploiting opportunities for growth is critical to sustain a business. Markets evolve as new technologies emerge, and customers’ needs and tastes change. These changes threaten a firm’s position in the market and its very survival, but they also create growth and increased profitability.
There are two ways to grow a company’s revenue. One is by gaining more customers. This occurs by either taking them away from competitors, which is generally difficult and expensive or finding underserved customer segments and exploiting them, or expanding the products and services that you sell to existing customers. This generally occurs by finding new complementary goods or services to provide them that will add value.
Start by assessing your company’s current products and services. I don’t mean benchmarking against the competition, but rather looking at how your products and services stack up against what is possible. Do they still fit with current customer needs, particularly your leading customers/early adopters? What features or functions might be dropped or added? Can you do it more cheaply or better using emerging technologies?
The next way to grow is to look at customers. Ask yourself what customers you are overlooking. Red Wing Shoes was looking past women until recently, when they began targeting the segment to great success. You need to search for customers that would benefit from your product/service but aren’t currently using it because they don’t know about it, you are not using the right distribution channels, etc. These tangential markets can be profitable opportunities.
So, opportunities arise when there is a substantial gap between the current offering and what is possible, and when there are underserved customers that can be reached with minor changes and redesigns.
The St. Thomas Family Business Center is hosting a panel discussion on identifying business opportunities on Sept. 20, open to members of family businesses to attend.
David Deeds is the Schulze Endowed Chair in Entrepreneurship and research director of the Schulze School of Entrepreneurship at the University of St. Thomas Opus College of Business.