Learn from customers, competitors, and those in completely unrelated fields.
Figuring out the first products my company would sell was pretty easy; it was where to go from there that was a challenge. Like most small businesses, mine has limited resources so they have to be used very judiciously, especially when it comes to expanding the business into new areas.
I've found, in order to expand our product line but with minimal risk, I pursue these three foolproof strategies:
Mine customer feedback.
One way to expand your business is to be first to got to market with a new product. Deciding which one can be tricky, however, and getting it wrong can be expensive. At Metal Mafia, we let customers guide us, and in the process, we are able to pad our product lines with sure bets. The best part is, this research doesn’t cost us a thing. We simply make customer feedback an integral part of our product development process. Every sales rep keeps a list of all the products customers request, the date they are requested, and the intended use for the product. When our product development employees start thinking about items or new lines, that list is the first place they go. Based on the number of requests and how a product will be used, we can anticipate which one will help customers the most, and know when we have a sale waiting to happen.
Learn what your competitors are doing.
Another sound way to move your business into a new area? Look at what others are doing and figure out how to do it better. To get the inside scoop on what’s happening in the industry, check in with your suppliers. They are a great resource on what your competitors are doing--either because they are trying to win your competitors’ business as well as yours, or just because they want to court your business better. In the accessories industry, for example, a lot of trends develop in Europe. Although we design all our products, some of the factories that manufacture our products supply both European and American companies. When I get ready to start designing, I ask the factories to show me items currently on order by European companies. From this assortment, I can see which direction the demand is headed, and then create my own jewelry to meet it. We are then able to offer a well-tweaked product, and get strong sales immediately. Building on market trends, rather than always inventing them, is a smart way to avoid wasting money on those trends that turn out to be just a second-rate fad that quickly passes.
Innovate from scratch.
Another part of your business expansion should be true innovation. I find the best sources for inspiration are businesses in completely unrelated fields. One of the coolest products Metal Mafia has made so far is an earring with a moveable ball bearing inside. Our designers were influenced by a skateboard manufacturer ad that made the wheel of the board--with its visible ball-bearing--look so beautiful they thought it could almost be jewelry. They went to the hardware store, found out the sizes they could get bearings in, and made them into stark industrial-looking earrings. On another occasion we developed new packaging for a chain store that mimicked cool silver bags some computer equipment happened to arrive in. Because we carefully calculate our risks on the first two areas of product line expansion, we have the financial wiggle room left to take bigger leaps when it comes to innovation. While it's usually more expensive, pure innovation can often be more rewarding both in terms of sales and employee satisfaction.
Expanding your product or service line does not have to be risky. But it is a crucial to grow your small business.
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Vanessa Merit Nornberg: In 2004, Vanessa opened Metal Mafia, a wholesale body and costume jewelry company that sells to more than 5,000 specialty shops and retail chains in 23 countries. Metal Mafia was an Inc. 500 company in 2009. @vanessanornberg