One of the biggest challenges for many small companies is trying to understand how to grow and expand the business. For some, especially in the service sector, expansion might be geographically limited due to hard costs - a fully loaded service vehicle can easily top $100,000 plus the skilled labor team to employ in it. On the other hand, America is built largely in a service economy now, with many more "intangibles" for products today, so how can, say, a small business - a consultant, let's say - expand their offerings?
For one thing, understand that perfection is poverty. No product or service was ever designed perfectly the first time. Every book ever written has been cut and proofed by an editor and just as importantly, no one ever carried a finished product to market without substantial testing and revision.
Here's the rule of thumb for new services - create 40% of it before you sell the first one, then use that first sale to guide you on how to structure the completed package.
I can hear you all right now, "Gerber's lost his marbles! My business situation is special and regulations forbid me to launch anything that is fully vetted and documented."
In a very few cases, you're right.
Very, very few.
If you are raising money for a venture capital deal or need institutional investors, you're absolutely right. Most of us aren't, though. We're web designers, marketers, social media specialists, auto repair shops, alarm companies, or accountants.
The beauty of the 40% Rule is that many of these products and services are already in a sort of murky developmental stage in your company anyway. In the case of a web designer, it could be an add-on software or program or offering hosting for the website that you built.
A repair shop could offer an annual maintenance package.
An accounting firm could offer bookkeeping services based on QuickBooks.
In each case, this service or product is not intended to replace the primary role of the company, but to be a value-add for existing clients. Just as importantly, because it is a value add, the marketing costs of client conversion, lead capture, and marketing is lower. At the same time, since we are building out the offering as we go, utilizing existing clients allows you to be using some of the goodwill you have built up based on your reputation - not on the expectations with a new service offering.
Now, there IS a Catch-22 in all this - because you have only designed a thin framework (the 40%) of what the product or service is, once you have closed a sale on it, it is imperative that you stay focused on that new client and how they are being taken care of. If you don't stay on top of this - managing production, keeping in touch with the client, and even managing scope creep, you can quickly find yourself having created a product that either nobody wants because it isn't robust enough or one that everyone wants because you aren't charging enough.
In other words, doing exactly what successful entrepreneurs have been doing since long before I summed it all up in The E-Myth books - creating systems to effectively manage a Great, Growing Company.
This is the type of expansion that is extremely lucrative on the one hand and very stressful on the other. No matter what, though, there's no denying that this offers a sure-fire way to grow your business in the new year.