Successful businesses naturally tend to expand. As a business’s sales, resources and headcount rise, it comes as no surprise that new products and even ventures into new industries will soon follow. While it’s not baffling for Amazon to start a streaming service or Uber to start car rentals, small businesses often deal with a unique set of questions and constraints before moving into a new industry. Small businesses looking to expand their services or products into areas wholly new to their team or history must do so cautiously and strategically as you have much more to lose than your larger counterparts if things don’t go as planned. 

Small businesses feeling out new products can run the serious risk of overextending or alienating existing niches. The most thoughtful small business expansions should not be done only for capital gain or easy parallel growth; your public image and current customer perception must be considered before any major change to your business’s services or products. Consider this list of conditions to weigh if your business (and your customers) risk overextending when branching into new product territory.

Parallel Expansion

Before making a change or expansion that would dramatically change or redirect the type of product or services you offer, find out if your customers are already satisfied. The most successful expansions are parallel in that they both expand your scope and bring in new clients as well as further benefit your existing base of customers. Here’s an example: A basic one-room laundromat manages to buy/rent an adjacent space and plan an expansion. While adding in more washers and dryers is certainly a safe bet, management is also considering investing in space for dry-cleaning and other specialty services. This is a perfect example of a measured, safe, and likely parallel expansion that customers who already do their washing and drying could more than conceivably take advantage of those further services. Better yet, new customers would be likely to take advantage of the business’s original wash and dry services even if they came in for their new specialty services at first.

Parallel expansion, however safe, often doesn’t account for branching into wholly new industries or reinventing your business. But, if you plan to offer entirely different services in addition to your existing ones, it is likely wise to make sure you don’t alienate your existing customers in doing so. In fact, if done properly, your existing customers could be your very first customers for the new service!

Increasing Overall Customer Value

If your expansion is not wholly replacing your existing products, try to find ways to have both old and new products benefit the same customers. 

Offering new products that appeal to your existing customer base is important but building a full relationship with new customers who benefit from your pre-existing services is equally important. Consider this: a bicycle rental company has enough trained staff and experts to begin offering repair services in addition to their rental services. Bicycle rentals and bicycle repairs are services needed by two  different target markets; but that doesn’t mean that consumers can’t benefit from both services. If a new customer brought into the shop because of the shop’s new repair service finds out the shop also offers rentals, they could just as well rent bicycles the next time friends or family visit. In the best cases of product expansion – those that have the best chance of being successful – both avoid alienating existing customers and make it extremely easy for new customers to benefit from existing services as well.

Customer Research

Whether or not your business is able to financially support an industry-based product or service expansion usually doesn’t give a full enough picture as to whether that expansion is a sound choice. Market research is an essential step before launching an expanded product line. Survey your existing customers and collect as much input as possible before even considering a major expansion. While the interests and passions of business owners ought to play a major role in the expansions of their own businesses, those passions run the risk of turning dry if customers don’t share those sentiments.

For customers that patronize your business in person, gauge their interests on the spot. Or better yet, write up a collection of multiple choice, Y/N, or open-ended questions about your business that can be asked quickly during a check-out process or a visit to the office. Those customers enthusiastic about your business and who already consider your business part of their daily rituals are quite likely to participate especially if you can demonstrate how helpful their input truly is.

If you have a website or a list of customer email addresses, consider creating a free survey with straightforward and simple questions. Questions for digital surveys ought to be considerably less time-consuming than in-person counterparts. No matter the medium, your survey should be direct: ask very specifically… “If our business were to offer (whatever new product or service), would you add that to your existing purchases at our business?” or “Are you satisfied with our existing products or services?” Once you have a pool of thoughtful and legitimate responses, sit down with trusted staff and all relevant decision makers in your business to see if your customers’ opinions can inform expansion direction.

Marketing

Making a major change to your product line or business structure is hard enough to follow through on internally, but it is essential that you and your team make sure your customers are just as excited about your changes as you are. Consider the ways that your best and most frequent customers learn about your business. Do you have an email list? Do you send coupon circulars in your local area? Do you  sponsor and have a booth/space for fairs or events? Investigate the ways customers interact with your business and use those spaces to celebrate your business’s changes.

A worst-case scenario and the opening steps to overextending in a small business is investing in a new product and having that new part of your business overshadowed by your existing system. Make sure your customer knows the most specific details about your new venture and any potential ways it may affect how they already interact with your business.

Likewise, make sure you have a well-thought out strategy to launch and market your new products to any new potential customer groups.

Pilot Runs and Steady Entries

Wherever possible, it is generally a good idea to run pilot programs and ease your business into any kind of major changes. Of course, depending on your existing industry and infrastructure, it’s possible that large investments and equipment may block the way to meaningfully showing off your new product or venture but try to find some creative means around those roadblocks. Start by offering the new product/service on a small scale and limited basis to a small subset of existing customers to gauge interest. If the trial program goes well with those customers, that is proof enough that the expansion may be worth the fuller investment.

No Way to Know but Many Ways to Try

Every expansion is a risk. No matter how dead-set or fully certain you and your team are that you’ll succeed, the only way to know is to try. Do your research and make sure your staff are equipped and educated about your upcoming changes and do the same for your best customers. Small business owners are uniquely informed about the needs of their customers and often equally aware of their own abilities. Trust your instincts and listen to your customers, and overextension ought to be the least of your worries.