Finding new business verticals
If you’ve exhausted the growth opportunities in your existing market, or your existing market feels flat, finding a new market vertical may be the way forward.
Vertical integration
Is where you look at your supply chain to determine if there is an opportunity to be more involved in your industry, for example:
- Taking over one of your main suppliers to control the flow of materials and save on costs
- Buying direct off manufacturers and becoming the wholesaler to other businesses (as well as your own)
- If you sell to other businesses, consider buying them to then have guaranteed customers
- If you’re a wholesaler, add a retail outlet and start selling direct to the end user
- Any activity where you expand and find new markets by investing in the infrastructure of your industry
Horizontal integration
Is where you find new markets by opening new businesses in different areas, for example:
- Buying competitors or complementary businesses
- Franchising your business
- Opening new branches or stores in new regions
- Agreeing to sub-contract to other businesses
Finding a new market could be replicating what you’re already doing somewhere else.
New business models
It may be possible to find new markets by adopting new business models such as:
- Getting people to re-sell your product or service
- Finding online platforms that bring buyers and sellers together
- A subscription model where customers are willing to commit to recurring payments in exchange for defined products or services
- The license/royalty model if you've developed an innovation which you protect through a patent, copyright, trademark, or trade secret, creating intellectual property. You would then license the innovation or technology to a third party
- An advertising model, presenting news, information or features that attract an audience and then sell advertising space to businesses that have a message for that audience
Offer pre-paid services
If you provide services, can you introduce fixed-rate service agreements rather than charging fees by the hour? The fixed-rate business model aims for predictable cash flow in advance. Customers paying by direct debit (you pull payments from their bank accounts automatically through your bank) eliminate invoicing costs and debt collection issues.
Some examples include:
- An accounting firm offering accounting services at $500 per month, regardless of the activity level. The firm gains a reliable revenue stream and is betting that many businesses won’t use $500 worth of services each month
- An IT business offering 24-hour ‘help desk’ service for $200 per month, regardless of whether the service is used or not
Try to identify possibilities for charging fixed monthly service levels.
Consider exporting
Overseas markets offer opportunities to expand your business, but there’s a lot to consider. Exporting can be both risky and highly rewarding, making research crucial.
Conduct high quality, on-the-ground research in the countries you’re considering. Make sure to find out what regulations, tariffs, and business risks are present in your new target market.
Explore new markets such as B2B or B2C
If you’ve built a business with a focus on selling to consumers (B2C), consider whether your goods or services would be of use to other businesses (B2B). Perhaps the government or education sectors have opportunities to explore.
In either case, you may need to tweak your business slightly to appeal to the new market. For example, while your existing products or services may be useful to both B2B and B2C markets, businesses and consumers have different pain points, problems to solve and priorities.
You may need to adjust your marketing and pricing to address these differences and position your business as the solution.
Summary
Finding new customers and markets could open the door to business growth, but it requires foresight and action.
