Many businesses are expanding their services to generate additional revenue. It seems to make sense to sell more to your existing clients, especially if the product or service is similar to what you offer now. What if expanding your services actually costs you money and removes your competitive advantage? Would you still do it?
Consider the hypothetical cases of two different printing companies in Tucson.
Pete has owned a thriving printing business for years. Then online companies started offering discount print services and took away some of his market share. Pete decided to expand his services to include promotional products, graphic design, vehicle wraps and website design. He hired and trained people to market and provide those services. Peteβs expenses went up, but so did his income. It looked like Pete found his solution.
Meanwhile, his biggest competitor, Mario, decided to stay focused on his printing business and increase his market share instead of offering additional products.
Mario contacted several local professionals who offered promotional products, graphic design, vehicle wrap and website design. These are the same services Pete, his competitor, just started offering. Many of these people had been referring business to Pete for years, and were unaware Pete was now competing with them.
Mario met with all of them and explained he had no interest in competing with their businesses. He promised to keep his business focused on printing, but needed their help. Mario asked if they would refer their print business to him, and he would refer business back to them. They all agreed and Mario was able to generate additional business. He pulled market share from his biggest competitor and did not incur any additional expenses. Maybe Mario found a better solution?
If you are thinking of expanding services, consider focusing on the core of your business and create additional strategic partnerships instead.
