What’s The Best Strategy – Grow The Core Or Expand?

Is there a right way – and a wrong way – to go about growing a business?Do you grow the core or expand?

There has to be, because some companies try to grow and fail.

I believe there is one thing that is common to all companies which grow successfully.

But businesses have to grow and succeed in a complex world where multiple, sometimes conflicting, factors are constantly at work.

One question we’re asked often is, should a business owner focus on growing the core business or expand into other areas?

The answer isn’t simply yes or no. It’s “it depends on how you do it”.

Be sure you know what has made you successful

Before looking for new areas to expand into, it’s essential to really understand precisely what has made the business successful.

We see business owners assume they know why their company is doing well all the time. But the wise ones look for verification of their own thinking before plunging ahead.

They get input from customers, suppliers and even peers, whose perceptions are invaluable. Those groups add a perspective which people inside the company simply cannot have.

Then the owners set aside time to think through what they’ve learned, discussing it thoroughly with their management teams and advisors.

Once they know what has given them their competitive edge, their core competencies in consultant speak, they can look for opportunities while greatly reducing the risk of making a mistake.

For example, if you’re great at customer service and being a high-quality producer, don’t try to become a low-cost value player.

Then use that to evaluate new opportunities

Opportunities can be evaluated by looking at their attractiveness and the probability a company can be successful. (Download our free guide here.)

A key factor in the probability of success is whether or not a company’s core competencies not only match the key requirements for success – but also exceed the strengths of its competitors. Clearly, opportunities that aren’t consistent with a business’ core competencies are too much of a stretch for it to be successful.

That’s when the business owner must be ruthless and just say no.

Otherwise those “opportunities” will become black holes of time, effort, and money and the company will likely fail.

Focus on the core and expand – but with care

We know that all products and services have a life cycle. So it’s important for a business owner not to rest on his or her laurels.

It’s important to strengthen, grow, and defend the core business by developing new products and services.

But it’s also important not to miss out on potentially great new growth opportunities.

Do it by understanding what you’re good at – and building on that.

 

If you enjoyed this post you’ll also enjoy Are Your Core Competencies Coming – Or Going?

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Tags: business owners, Core competencies, developing new products and services, evaluation, expansion, growth, Jim Stewart, opportunities, ProfitPATH, strategy, Strategy Development, Strategy Execution, success

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