Entrepreneurs are in a precarious position when it comes to expanding their product line. On the one hand, an expanded product offering means a better bottom line and outreach into new markets. On the other hand, it means leaving the business’s comfort zone and entering a new market where success is not a given. Examining the data about the market, production capability and the business’s potential can help make this decision, but these are not the only things a business owner needs to consider.
The market itself can be dynamic. Learning about the consumers that may be purchasing these products is as vital to success as the data on the business itself. Below, 15 leaders from Forbes Business Council delve into the details that an entrepreneur should be researching before deciding whether to expand their existing product line.
1. Perform A SWOT Analysis
Before determining if a company should expand upon its existing product line, the business may find value and clarity in performing a SWOT (strengths, weaknesses, opportunities and threats) analysis to see if the company’s strengths can support the new opportunity. Understanding your business strengths and weaknesses is a fast and efficient way to receive clarity about your organization’s position to take on the new endeavor. – Joseph Sommer, Whitestone Branding
2. Do Surveys On Social Media
I recommend that entrepreneurs do surveys on social media to test a new product or line expansion before actually producing it. This will save time, money and resources. Social media platforms like Instagram and Twitter have made it incredibly easy to offer a questionnaire to followers, so before creating another color, size or flavor of your product or service, create a survey to see if customers are even interested in purchasing it from you. – Jean Paul Paulynice, Empowering Confident Youth
3. Determine If You’re Solving A Problem
As an entrepreneur, solving a problem is the goal when creating any project or service. If the new product is going to solve the problem, by all means expand away! The money will follow. – Vijal Suthar, GRP Capital
4. Examine Your Current Sales
Look at current sales. Are they stable? Are they growing? If you have stability and growth, you are ready to add complementary products to your existing line. So many companies fail to capture additional market share because of products that don’t compliment the brand. Nothing is wrong with being really good at one thing. Apple, In-N-Out and Tesla are examples of companies with simple product lines. – Christopher M. Naghibi, Black Crown Inc
5. Consider Revenue Growth Room
I always take into account revenue growth. If it seems like we don’t have too much room to grow (mainly because we already grew enough), then we should expand our product lines so we can increase our revenue stream. However, if we still have room to grow, then it is better to focus on the current product. – Daniel Sánchez, Influencity
6. Research The Market
First of all, do adequate market research to understand what the demand is for that product line. Clearly understand the respective metrics and the resources required to scale. – Mitch Ginsberg, CommLoan Inc.
7. Ask Your Network
As part of our pandemic pivot, our services company launched its first product. We did this only after talking to dozens of friendlies—people in our network we trusted to give us honest feedback. We learned something new in every conversation and iterated until we created a product that clearly fills a gap in the marketplace. For their time, we offered a product sample. – Meighan Newhouse, Inspirant Group
8. Look At Strategic Alignment
The one thing entrepreneurs should do is look at strategic alignment. Traditional thinking says this should come from customers. This could be the wrong thing to do. The decision is informed by your customers, sales and marketing, but these are only inputs. The decision-making process should include these inputs, along with financial, product and market factors. – John Carter, TCGen Inc.
9. Have A Customized Focus Group
Many entrepreneurs make the mistake of focusing on the upside. The upside will take care of itself. The one thing that entrepreneurs need to do before deciding on expanding a product line is to design a customized focus group with the demographic population being targeted. Entering the market with a product should be a rifle-shot approach, not a shotgun approach! – Antony Gordon, Stealth Consulting Management, Inc
10. Hold A Trial Launch
Hold a trial launch to test new products. Allow your customers to make preorders. It’s always important to let customers show their interest with their investment rather than a promise like in a survey. This allows you to determine if there is a demand before making a large investment. Use preorders to fund your new product or program, and design your new line around your paying customer needs. – Nselaa Ward, Ni Nava & Associates, LLC
11. Clarify Your Value Proposition
Is the value proposition of your new product clear to the consumer? Too many options can be confusing, causing fewer sales all around. When we launched a new subscription recently, we discontinued an old one so as to not cause people to be overwhelmed, even though we had over 1,000 people subscribed to it. – Harrison Baum, Daily High Club
12. Go Back To Your Original Mission
Knowing what you do and don’t want to do is a great place to start in understanding whether or not you should expand your product or service offering. Anytime you are looking to expand you should go back to your original mission and value statement as a company to see if what you’re going to do is reflective of that. – James Traylor, Upstate Special Needs Planning
13. Check Out Your Competition
Entrepreneurs need be conscious of their industry landscape and predict consumer trends in order to pivot their business offerings at just the right time. More realistically, if your competition is providing additional services that are drawing your consumer base away from you, you have to consider putting the right people and processes in place to expand your product or service offerings. – Nona Djavid, Part Time Million Dollar Business
14. Study Clients’ Previous Experience
Study your clients’ post-product experience to see if they need an additional product after purchasing your main offering. This is what we do since we have noticed that almost every time we build a project for a client, they need a press release to tell the world about it. We added this service to our product line, offering it as an upsell after we finish our consultancy service. – Sardor Akhmedov, Jafton.com
15. Ensure It’s Not Harming Other Operations
Upside in this economic environment is a great thing, but given the uncertainty still ahead, ask yourself if the business can add to its product line and generate sufficient gross margins from it without causing deterioration to other parts of the organization. That is the first filter to evaluate today. – Ryan Weissmueller, Fintrepid Solutions
This article originally appeared in Forbes. Click here to read