Adopting the “Fearless Business Growth” mentality means exploring all the options and risks for adding volume and profit to your existing core business.
Industry and business experts have identified diversification as the number one (#1) way to grow your existing cleaning business. There is much value to be placed on that thinking in today’s marketplace. In addition to adding volume, becoming the “one stop” for all your customers’ needs is a way to encourage longevity in clients and become a valued resource for them.
Adding to your income stream by diversifying can provide possibilities for revenue and profit growth, whether it’s the addition of a window cleaning division, a floor care division, tile and grout cleaning or concierge personal service. Many of these avenues for growth are a natural diversity of services you already provide to a customer base that is loyal to you.
Expansion, on the other hand, is a different method of adding volume and profit to your business. Expansion is defined as adding new although related services to a new market of prospects. Adding commercial cleaning to your residential business or construction cleaning or adding residential maid service to your commercial janitorial business are some examples. Here you are offering a new product/service to a new group of customers which is closely related to your core business.
Of course there are benefits and risks to both growth strategies, so let’s take a look:
Diversification
- Easiest and fastest way to add revenue
- Low risk as customer loyalty is great
- Can be done through partnerships with other professionals, such as carpet cleaners and window cleaners
- Can be a profit center with little startup investment
- Target market is your existing customer base
Expansion
- More risk involved as customer base and skill are underdeveloped
- Treated as startup with funding, education and equipment
- May operate under a separate name/company structure
- Target market is separate from existing customer base: construction companies, property managers, residential or commercial prospects, window washing prospects or Realtors are just a few examples.
Geographic Expansion
- Involves multiple offices
- Difficult to manage without strong supervision
- Requires much of owner’s time in initial stages
- Start-up costs realized
When thinking about diversification or expansion, several key issues are important.
- Adding volume does not guarantee profit
- Risk of diluting your core business profits and strengths can be great
- Pricing the new service to assure profit is tricky
- Budgeting and funding the new venture can be daunting
- Hiring and training staff often requires new and different processes
- Building and implementing a more complex marketing and business plan is needed to support both your existing business and the new venture
- Owner training and guidance becomes more specialized and requires greater commitment
Caution – Here’s what can cost real money when expanding or diversifying!
- Lack of funding for new operation
- Lack of understanding of industry profit margins for new venture
- Lack of understanding of YOUR financial health
- Taking on too much too quickly
- Ineffective staffing and management
- Lack of attention to core business
- Lack of technical knowledge and training in new specialty or market
Adopting the “Fearless Business Growth” mentality means exploring all the options and risks for adding volume and profit to your existing core business. There are many opportunities in our industry for Fearless Business Growth. As with all ventures, planning, analyzing and professional execution are part of the equation. To eliminate those elements from your growth path is a sure recipe for disaster and business failure.
With proper goal setting, marketing, budgeting and monitoring of all facets of your business, success is yours for the taking.
