Just like running a marathon, a fast start in business doesn’t necessarily lead to a strong finish. Many companies start fast only to run out of a gas. A Kauffman Foundation and Inc. Magazine study of the 5,000 fastest growing companies found that after five to eight years, two-thirds had lost their momentum, shrinking in size, shutting down or getting sold for a loss. While these companies succeeded at finding effective ways to sell and deliver their products to new customers, they failed to go beyond this by improving their efficiency and developing new products to sell to new markets. The failure to continue growing through these stages caused them to plateau and lose their initial vibrancy.
One strategy for maintaining more dynamic growth is to diversify your company. Here are three ways diversification can help you continue growing your company and add to your bottom line.
Add a New Product Line
Amazon is an example of a company that has sustained its growth by releasing new product lines. Originally an online bookseller, Amazon grew exponentially by expanding into general online retail sales and releasing new products and services such as Kindle, online video hosting and online video streaming. Amazon’s newest success story is its intelligent personal assistant Alexa. Released in 2014, by 2020 could be worth a projected $10 billion in revenue, Business Insider reports.
As this illustrates, releasing a new product line can be a boon to your business. The key to a profitable product is good market research. Use your current customers as a research base and find out what types of other products they might need. Research emerging market trends to identify demands that you might fill with products complementing your current product line. Study your competitors to identify needs in your market that aren’t being met. You don’t even necessarily need to develop your own product if you can find a partner to help you supply your market with a product they need.
Outsource Prototyping and Production
The costs of prototyping and production can be a barrier to sustained growth. Developing a prototype mold can cost tens or even hundreds of thousands of dollars. Production can likewise generate significant expenses for raw materials, labor, consumable manufacturing supplies, and overhead. Finding ways to cut prototyping and production costs can enable you to trim your expenses and keep your profit margin up.
Outsourcing your prototyping and production is one way to keep these costs under control. 3D printing technology has made it easier to find affordable outsourcing than ever before. For instance, o-ring supplier Apple Rubber uses 3-D printing to offer customized o-rings in 8,000 sizes and numerous specialized materials for applications ranging from medical seals to the aerospace industry. Companies can request samples for testing before going into large-scale production, drastically reducing the costs that would normally be associated with prototyping. Online directories provide listings of 3-D printing suppliers specializing in applications for a wide variety of industries, including electronics, medical and dental services, and consumer products.
Open Another Location
As electric car and solar panel manufacturer Tesla continues to expand, the company has committed billions of dollars to opening a new battery factory in Nevada, and is now considering opening up an additional three factories. Tesla also plans to double its North American network of Supercharger stations. Industry watchers see these moves as steps towards Tesla becoming a giant in the sustainable energy industry.
Tesla’s expansion illustrates how opening new locations can help fuel business growth. To open a new location successfully, it’s important to do some preliminary groundwork, advises Entrepreneur. Consider how your new location will operate without the personnel from your existing location. Analyze your current location to identify the key elements that need to be duplicated in order for a new location to succeed. Do careful market research at prospective locations to make sure you’ve selected a suitable locale. Make sure you have adequate funding to continue running your current location as well as your new one.