Expanding Your Market Reach - Introduction
Regardless of the industry they are in, most new businesses go through similar stages of development in their early years. A classic study of small business growth described the first stage as "existence," with the main challenges a business faces during this period being simply getting enough customers and delivering products or services efficiently enough to establish its viability. Stage two is "survival," and the focus shifts to generating enough revenue over the short term to break even, stay in business and provide sufficient income to support the owners. Many small businesses never progress beyond this stage, earning marginal returns on invested time and capital and closing up shop when the owner retires or simply pulls the plug. In fact, about 97% of all new businesses never take the next step, according to the U.S. Small Business Administration Office of Advocacy.
Those businesses that do progress to the next stage—"success"—enter into a whole new world of opportunities, but it's one accompanied by significant challenges and tough choices. Most often, this transition takes place when a business's current target markets and/or channels begin exhibiting a diminishing rate of return. "You tend to pick off the low-hanging fruit in the early stages," says Pamela Springer, CEO of Manta Media, a provider of small-business information based in Westerville, Ohio.
A company faces two distinct challenges at this point. First, its initial universe of customers cannot provide sufficient revenues and profits to sustain the company's existence. Second, expanding the universe of customers requires the company to enter uncharted territory in terms of new markets, new channels, new products/services, new types of customers or some combination of those elements. This white paper looks at factors involved in taking a small business to the next level, various options for pursuing growth and expansion strategies, and resources available to small business owners to help them make the right choices and implement their decisions.
