If not now, when is the right time to expand your business?
If you’ve been thinking about expanding into a new or adjacent market, you might be hesitant about the risk due to the uncertain economic outlook. Nonetheless, with COVID-19 cases dropping, coupled with vaccine rollouts and more states relaxing restrictions, businesses are starting to make growth investments.
“There’s plenty of evidence to show that companies have emerged from their defensive crouch from the onset of the pandemic, becoming much more aggressive in seeking to restart growth,” shared Hanover Research Chief Content Officer Anil Prahlad while moderating their “Seeking New Growth Opportunities Through Market Analysis” webinar.
While growth is necessary, businesses should remain strategic and avoid sudden and big changes as it can be “a complex, experimental and somewhat chaotic process,” Prahlad said.
Hanover Research, a firm that specializes in market research and analytics, said the key is to collect data and analyze your current and prospective customers’ pain points and from there determine how your business can help resolve their issues.
“Go where the data leads. In an uncertain economic climate, many companies default to a reactive posture, making knee-jerk decisions based on anecdotal evidence that can have lasting impacts on their business. Informed, data-driven decision-making is key to effective market exploration and smart growth planning.” - Hanover Research.
Certain Business Types Will Continue to Thrive
According to the U.S. Chamber of Commerce, certain business types thrived during the pandemic, experiencing exponential increases in demand. For the most part, these businesses are centered around technology and recreation, and will most probably continue to experience success after things return to normal.
Some of the types of businesses the U.S. Chamber of Commerce listed included at-home fitness, home improvement, e-commerce, telemedicine, food delivery, cybersecurity and virtual events.
While it’s important to seize on potentially profitable opportunities, caution is advised.
One of the ways to grow while minimizing the risk is to look into adjacent markets, recommends David Fong, Vice President of Marketing for Aviacode Inc., who served as an expert panelist for the Hanover Research webinar.
For example, if your core business is selling to enterprise customers such as healthcare systems, what about broadening your reach to small-to-medium sized businesses by customizing your product and tweaking value propositions to them.
“Whether your business is located in Utah or Colorado and that’s been your market, geography has less of a constraint now because people are so much more willing to go online and buy a product and they don’t care whether you’re based in Oregon or Colorado or Utah,” Fong said. “They just know it’s going to be shipped to them.”
Surprising Changes in Baby Boomers Purchasing Patterns
Hanover Research reported that one of the most surprising findings was seen in Baby Boomers. Before the pandemic, the report said more than 80% made fewer than half of their purchases online. Months later into the pandemic, nearly half of Baby Boomers indicated that they plan to increase online purchases in a post-COVID world.
Other findings reported by Hanover Research included:
- Both consumers and businesses indicate that COVID-19 is continuing to impact their daily lives and outcomes, respectively, although at a diminished level.
- Spending in nonessential categories has also stabilized since the summer, although these numbers are expected to change with the vaccine rollout as consumer confidence increases.
- For B2B companies, cancellations of in-person demos and trade shows and longer sales cycles meant more reliance on digital self-serve channels.
Market Growth Tests Necessary to Ensure Success
Besides sticking close to your core market, Hanover Research recommends establishing “consistent, repeatable processes” to successfully evaluate growth opportunities.
According to the Five Critical Tests for Market Growth Guidebook from Hanover Research, the first step is determining which path works best. The series of tests help determine the best market to dive into – the existing one, adjacent market or something new.
While it may seem daunting to expand your reach right now, it doesn’t hurt to at least conduct a thorough examination. And as history has shown, in times of challenge come opportunities for innovations in the marketplace.
“But to do that successfully, you must take data-driven approaches and dedicate the necessary resources to that strategy,” Prahlad said. “Ensuring that your next moves will shore up with what your customer is thinking, feeling and demanding is a reliable path of success in a rapidly changing environment.”