Friday, July 20, 2007

Something Old, Something New: 5 Ways to Know When to Offer a New Product

My hairstylist recently added body waxing to the services performed at his salon. Now his clients can schedule an eyebrow wax with a “cut-and-color” in one convenient stop. In a similar move, my dentist’s office now offers specialty toothpaste and cosmetic dentistry packages. In addition to fabulous pinot noir, a winemaker I know also sells vineyard merchandise such as wineglasses, hats, and shirts at his retail space.

Many small businesses boost profitability and sales by expanding their menu of services or adding a new product line. Because of the convenience of one-stop shopping and your established credibility, doing so can provide a real benefit for your customers—creating a win-win relationship.

How do you know when it’s time to add something new?

Pay attention to trends and competitors.
My dentist wasn’t the only one adding whitening and cosmetic services to his practice. Throughout our community (and probably yours), dental practices had begun to advertise free whitening to new patients. If your competitors, or others in your industry, are offering a new service or product, it may be time for you to get on board…or risk being left behind.

Examine your numbers.
Know your profit centers and sales numbers. If you’re not adept at creating and interpreting business spreadsheets, consult with your CPA to get a handle on which products or services are most profitable. Also be sure that you know which products or services are the best selling and which are lagging. In your most profitable and popular areas, brainstorm related products or services that you could add to fuel new growth. Consider ridding yourself of the least profitable and least popular services or products, replacing them with something new that can generate better revenue.

It’s about time.
So exactly how many years *have* you been selling those same widgets? If your business is providing you the income you want, it can be easy to let things stay the same. But know that things rarely stay static forever. Consumers today are constantly being exposed to new products and ways of doing business. With the Internet, news about innovations can travel the globe in less than a second. If your business has been carrying the same products or doing business the same way since the early 1980s, you run the risk of looking like a dinosaur to your customers—and we all know how that story ends.

Know your customers.
A local music store just closed one of its two locations because it has been losing money since the debut of iTunes. The business owner had been watching for decades as his customer base changed from teens and young people who collected albums, then cassettes, then CDs, to a mostly older demographic. Over a long period of time, he lost his core customer base. His efforts a few years ago to add new products to his store came too late and were too little to reclaim the now-digital-music-dependent teen consumer. If you see a trend with core market shrinking, or the demographics of your neighborhood changing, that’s your cue to start branching out your business’s offering right away.

Spice up your life.
You may be bored with the work your business is doing and find that you’re burned out performing the same services day in and day out. In this case, take yourself out to lunch or away for a weekend to get back in touch with your goals. Why did you start doing the work you’re doing? Do you love helping people solve problems? Are you excited about making others feel good? Does it thrill you to create organization out of chaos? What is it *really* that turned you on about the business you own? When you find the heart of what it is you enjoy, you’ll be able to see new products or services that will refresh your business and reconnect you to your passions.

And finally…
New product lines or services should be a natural fit with what your business is currently doing and what your business is all about. If you’re in the business of providing expert financial planning advice, for instance, it doesn’t make sense for you to add web site design services to your business offerings.

While it may be true that some of your clients could use web design assistance as well, promoting yourself as a provider of vastly different services dilutes consumers’ perception of your competence at both. Instead, consider becoming a distributor for a respected line of financial planning tools and resources or selling yourself as a speaker and workshop leader for financial planning topics.

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