 |
 |
||
|
|
||||||||
|
||||||||
|
3.3 Expansion Strategies 3.3(a) Growth through product development
(i) Develop new products and services
New products and services are the lifeblood of all businesses. Investing in their development isn't an optional extra - it is crucial to business growth and profitability.
But embarking on the development process is risky. It needs considerable planning and organization.
The set of tips described below will outline the key stages in the lifecycle of products and services so you know when the time is right for your business to start the development process. It will explain how a planned and phased development process will help you make the wisest investment and budgeting decisions. It will also advise you on how best to create a development team and manage a project.
* The lifecycle of products and services
* Developing your ideas
* Match products and services to market needs
* Pricing your proposed service or product
* The project development process
* Creating a project team
* Investment and cost control
* Manage a development project
(ii) Research and develop your business ideas
Developing your business idea into a viable product or service is a critical part of building a business. Thorough assessment and market research at an early stage will help you to establish whether there is a market for your product or service.
The set of tips described below will help you assess whether your idea can form the foundation for a successful business and put a process in place to monitor and measure its progress.
It also has tips on how to finance the development of your idea and how to protect it if other people get involved.
* Finding and developing your idea
* Is there a market for my idea?
* Plan the development of your idea
* Finance the development of your idea
* Sharing your ideas with others
* Test the market
(iii) Manage your research, design and development
All businesses need to keep improving their products, services and business processes to anticipate and respond to the changing needs of customers.
This means investing time and money into market research to establish these needs and then into developing your products and services to ensure you meet them.
Research and development - together with the design of new and modified products - forms an essential part of making your business more profitable and productive.
The set of tips described below looks at why research and development - and sometimes product design - are so important if your business is to remain competitive.
It gives advice on how the research and development and product design processes can be managed and includes details of government support for certain types of research and development activity.
* What is research, design and development?
* Commercial benefits of research and development
* Exploring your ideas
* Strategy for research and development
* Research and development - investment and risks
* Managing the design process
* Knowing when to stop
* Funding your research and development
(iv) Market research and market reports
All successful businesses need to have a close understanding of potential and existing customers and the marketplace they work in.
This understanding allows you to target customers, sell effectively, compete with other suppliers and spot new opportunities. Performing market research on potential customers and your competitors will help you to gain this vital knowledge.
You can build a picture of general trends using published market information - from free government statistics and data to paid-for market reports from commercial providers. Your own contacts and sales records can also be a great resource.
You can add to your knowledge by using field research - from surveys and discussions to product tests - to investigate customers' attitudes and examine questions specific to your business.
The set of tips described below explains what you need to know about market and customer research, how to build your knowledge and how using field research can fill in the gaps.
* Customer research: what you need to know
* Information on market trends and competitor intelligence
* Using market reports and other data
* Interpreting market information
* The basics of quantitative and qualitative field research
* Planning field research
* Tips for successful field research
* Should I use a market research agency?
(v) Use innovation to grow your business
The successful exploitation of new ideas is crucial to a business being able to improve its processes, bring new and improved products and services to market, increase its efficiency and, most importantly, improve its profitability.
Marketplaces - whether local, regional, national or global - are becoming highly competitive. Competition has heightened as a result of wider access to new technologies and the increased trading and knowledge-sharing opportunities offered by the Internet.
The set of tips described below explains how you can make innovation a key business process and outlines the different approaches you can take. It gives you advice on planning for innovation and creating the right business environment to develop your ideas. It also outlines the help and support available to innovative businesses.
* The business case for innovation
* Approaches to innovation
* Planning innovation
* Encourage innovation in your business
* Funding innovation
(vi) Manufacturing innovation
Manufacturing businesses face increasing competition and customers have a wide choice of suppliers. Owner-managers need to be flexible and should consider new ways of working and new technologies that will allow them to respond rapidly and cost-effectively to customer demand.
Innovation in manufacturing can be introduced in a wide range of areas, including new processes, new materials and the use of new equipment. It can improve the quality of your output and the health and safety in your business.
The set of tips described below explains how manufacturing businesses can benefit from innovation and outlines the different areas in which it can be introduced. It covers important new manufacturing technologies, shows you how to protect your innovations and identifies sources of help and advice in this area.
* The benefits of manufacturing innovation
* How manufacturers can use innovation
* Just-in-time production
* E-business and manufacturing
* Key manufacturing technologies
* Where to get help with manufacturing innovation
* Protecting innovative ideas and practices
(vii) Support networks and facilities for innovation and R&D
Business success often depends on innovation. In the UK a wide range of initiatives are available to help small businesses make the most of their research and development programmes.
Schemes and networks supported by the government offer businesses access to expert advice from specialist organizations as well as other businesses. These include Chambers of Commerce, InnovationRelayCenters and online networks. As location can also be a vital factor in the success of your business, science parks and assisted areas have been established to help companies grow and to promote science and technology.
The set of tips described below explains what support is available. It covers schemes and networks that provide practical advice or that can put you in touch with others that can help. It also explains how science parks and similar environments work and how they could benefit your business.
* Development agencies
* Virtual support networks
* Innovation Relay Centers
* Business innovation centers
* Assisted areas and business clusters
* Science parks
* Chambers of Commerce and local networks
* Knowledge transfer schemes
3.3(b) Growth through sales
(i) Increase your market share
Every business needs to think about getting the most out of its marketplace. If you're not increasing turnover every year, your business is shrinking in real terms.
Many businesses simply try to pick up extra sales wherever they can. While this opportunistic approach can be effective in the early days, it is unlikely to sustain longer-term growth.
There are several strategic options you can pursue to get the most out of your marketplace, as follows:
* Sell more to existing customers
* Focus your customer service and marketing efforts on retaining customers
* expand your customer base to include similar people who are not currently customers
* Sell through new channels or into new markets
* Use your core competences to create new products or services
The set of tips described below will show you methods you can consider to increase your market share, and how to plan it, manage and monitor it.
* Assess your customer base
* Sell more to existing customers
* Get old customers back
* Market and sell effectively to similar customers
* Use other channels to market
* Sell into new markets
* Consider diversification
(ii) Market research and market reports
All successful businesses need to have a close understanding of potential and existing customers and the marketplace they work in.
This understanding allows you to target customers, sell effectively, compete with other suppliers and spot new opportunities. Performing market research on potential customers and your competitors will help you to gain this vital knowledge.
You can build a picture of general trends using published market information - from free government statistics and data to paid-for market reports from commercial providers. Your own contacts and sales records can also be a great resource.
You can add to your knowledge by using field research - from surveys and discussions to product tests - to investigate customers' attitudes and examine questions specific to your business.
The set of tips described below explains what you need to know about market and customer research, how to build your knowledge and how using field research can fill in the gaps.
* Customer research: what you need to know
* Information on market trends and competitor intelligence
* Using market reports and other data
* Interpreting market information
* The basics of quantitative and qualitative field research
* Planning field research
* Tips for successful field research
* Should I use a market research agency?
(iii) Understand your competitors
Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives.
You can use this knowledge to create marketing strategies that take advantage of your competitors' weaknesses, and improve your own business performance. You can also assess any threats posed by both new entrants to your market and current competitors. This knowledge will help you to be realistic about how successful you can be.
The set of tips described below explains how to analyze who your competitors are, how to research what they're doing and how to act on the information you gain.
* Who are your competitors?
* What you need to know about your competitors
* Learning about your competitors
* Hearing about your competitors
* How to act on the competitor information you get
(iv) Identify potential sales channels
You've got a great product or service, but how do you sell it? Do you open a retail outlet, or go out knocking on doors? Should you recruit your own sales force or engage a sales agent? What about resellers? What about the Internet?
Choosing the right sales channel is one of the hardest, and most important, business decisions you will ever make. Getting it right increases your chances of success substantially.
There is a tool that is designed to help you make that decision. It asks you a short series of questions about:
* Your product or service
* The target audience for that product or service
It directs you to guidance on the sales channels most likely to help you achieve your business objective. It should take you no more than five minutes to complete.
Note: this tool is intended to provide a starting point for further research and should not be regarded as a substitute for professional advice.
(v) Choose and manage a commercial agent
Commercial agents are intermediaries that sell your goods or services on your behalf in return for commission.
Businesses usually appoint agents because they need their specialist help in reaching markets in a particular sector or geographical location.
Agents can be particularly useful for new businesses that have yet to build up a substantial number of contacts or can't yet afford to employ a dedicated salesperson.
Many businesses use agents to access domestic markets - but they can be particularly useful in overseas markets where different customs, ways of doing business or language barriers come into play.
The set of tips described below will help you decide whether a commercial agent can help your business and explains how to find and choose a commercial agent and ensure the relationship works.
* Pros and cons
* How a commercial agent can help your business
* Find a commercial agent
* Making sure you select the right agent
* What to look for in an agent
* Drawing up a contract with an agent
* The law on self-employed agents
* Getting the most out of the relationship with your agent
* Handling problems and ending the relationship with your agent
(vi) Reach your customers effectively
Every business needs customers. Choosing the right channels to sell to them is a crucial decision. You need to know how and where customers want to buy your products or services, and the best way of getting customers to hear about them.
For some businesses, reaching customers is relatively straightforward. High-street shops, for instance, rely on customers walking through the door.
The more sales channels you use, the more customers you can reach. But each channel adds costs. If you add a new channel only to find it attracts sales away from an existing channel without bringing significant extra sales, you'll be increasing your costs for little or no benefit.
The set of tips described below looks at the main sales channels you can choose from. It explains their strengths and weaknesses, and how you can use them to your advantage.
* Direct selling
* Selling wholesale
* Distance selling
* Selling overseas
* Using a sales agent
* Making your channels work together
(vii) Identify and sell more to your most valuable customers
Being in a position to focus on your most valuable customers might sound like a luxury. After all, many small businesses are grateful for customers of any kind.
But every business finds that some customers are more valuable than others. This can be for a range of reasons, from the size of their purchases to the relative ease of managing their account. Successful businesses are generally those that identify these customers, build relationships with them and work to bring in new customers with a similar profile.
The set of tips described below outlines how to identify which of your customers are the most valuable to you. It also provides tips on selling more to them and attracting new high-value customers.
* The benefits of understanding your customers
* Learn about your customers
* Make customer information available
* Analyze your customers
* What makes your customers valuable?
* Enhance the customer experience
* Market more effectively
* Find new customers
(viii) Create your marketing strategy
Developing a marketing strategy is vital for any business. Without one, your efforts to attract customers are likely to be haphazard and inefficient. The focus of your strategy should be to make sure that your products and services meet customer needs better than competitors and develop long-term and profitable relationships with those customers. It may also help you to identify whole new markets that you can successfully target.
Central to any successful marketing strategy is an understanding of your customers and their needs. The ability to constantly satisfy your customers' needs better than your competitors are able to will make you the preferred supplier in the marketplace. In order to achieve this, you will need to create a flexible strategy that can respond to changes in customer perceptions and demand.
Once you have created and implemented your strategy, it is equally important to monitor its effectiveness and to make any adjustments required to maintain its success.
The set of tips described below helps you to identify which customers to focus on and your key objectives in reaching them. It explains what to include in your marketing strategy and how it can be used as the basis for effective action.
* Key elements of a successful marketing strategy
* Understanding your strengths and weaknesses
* Developing your marketing strategy
* Tips and pitfalls
3.3(c) Growth through international trade
(i) Exporting - an overview
Although your business may have an established UK market, there's often no reason why it couldn't successfully compete overseas too, growing your revenue and profit.
But before you start, you need to have sound knowledge of your would-be markets. You also need to consider whether your products are right for each target market and whether you have the necessary resources to start exporting.
The set of tips described below tells you what you need to know and where you can find more information about exporting. For more specific information on exporting see our guides on exports and dispatching procedures, exporting your goods outside the EU and export declarations and the National Export System.
* Planning to export?
* Selling and distribution in overseas markets
* Marketing your product or service overseas
* Your legal responsibilities as an exporter
* Transport considerations
* Financial considerations
* Working effectively with different cultures
* Passport to Export
* Ten key steps to successful exporting
(ii) Are you ready to export?
Exporting can extend your market, boost your turnover and prevent you having too great a dependence on your UK-based customers. But it isn't always an easy option. Starting to export poses a whole new set of challenges, from identifying promising markets and customers to ensuring that you can fulfill your export contracts. Developing new export markets takes time and money.
A planned approach helps you to identify the best opportunities. It ensures that you understand what's involved, and have the resources and skills you need.
The set of tips described below sets out how you can assess whether you are ready to start exporting and decide the best way to go about it. For specific information on exporting see our guides on exports and dispatching procedures, exporting your goods outside the EU and export declarations and the National Export System.
Use our interactive tool to identify export opportunities in your target country.
* Understand the challenges of exporting
* Assess your skills and resources for exporting
* Assess export market opportunities
* Choose which export markets to enter
* Plan your export market entry strategy
* Manage export contracts and logistics
* Use the right export support services
* Review your export readiness
(iii) Selling and promotion overseas
Effective sales and promotion is essential for the success of any business. Trading internationally is no different.
You should plan your sales and promotional activities carefully for each of your target markets. Huge differences between markets and countries mean a "one size fits all" approach will not work. For each overseas market, you'll need a clear understanding of who your customers will be, what makes them buy and how best to get your products in front of them.
The set of tips described below will show you how to promote and sell your products internationally. It will show you how to position your product, choose the most appropriate sales channels and build and use marketing plans for new territories.
* Understand your overseas customers and markets
* Refine your positioning for overseas markets
* Refine your product and operations for overseas markets
* Build a marketing plan for overseas markets
* Promote your product overseas
* Use advertising and direct mail in overseas markets
* Use trade shows to market your business overseas
* Use trade visits to promote your business overseas
(iv) Importing - an overview
Any business that brings goods or services into the UK from another country is involved in importing.
If you intend to import goods you need to give careful consideration to the practicalities, such as how to get the goods into the country, as well as the legal requirements.
The set of tips described below explains the basics of importation into the UK. For specific information on importing, see our guides importing your goods from outside the EU, and acquiring goods inside the EU.
* Planning to import?
* Managing transport
* Your legal responsibilities as an importer
* Importing animals, food, vehicles, medicines and dangerous goods
* Protect your interests when importing
* Financial considerations
* Finding the right supplier overseas
(v) Are you ready to import?
Suppliers around the world offer a wide variety of goods that might suit your business. You might be able to find lower-priced supplies, giving you a competitive edge, or new supplies that allow you to sell a completely different product. Just as when you buy within the UK, it's important to find good suppliers, make sure they offer what you want and negotiate the right deal.
But importing also presents complications, such as managing long-distance relationships and organizing international transport and customs clearance. It's important to be sure that you are ready to import before you commit yourself.
The set of tips described below highlights the key issues you need to address, from planning your import strategy to making sure you can handle everything involved. For specific information on importing, see our guides on importing your goods from outside the EU, and acquiring goods within the EU.
* Plan your import objectives
* Understand what importing involves
* Assess your skills and resources for importing
* Decide your approach to importing
* Negotiate the right import deal
* Review your import readiness
(vi) Manage overseas suppliers
Trading with overseas suppliers raises a number of issues you may not be familiar with from trading within the UK. Typically, these include language differences, new payment methods and increased paperwork requirements.
However, with a little research and planning these challenges are easily overcome. Widening your purchasing to the international market can give you a significant competitive advantage. Using overseas suppliers can lower your input costs and give you access to specialized goods and materials that may not be available in the UK.
The set of tips described below outlines the differences you need to take account of when starting to trade overseas. It takes you through the key steps in finding and selecting overseas suppliers, and explains what to look for in terms of payment methods and drawing up contracts.
* The challenges of sourcing overseas
* Finding overseas suppliers
* Choosing an overseas supplier
* Building solid relationships with overseas suppliers
* Methods of paying overseas suppliers
* Drawing up contracts with overseas suppliers
3.3(d) Growth through technology
(i) Planning for e-commerce
E-commerce plays an increasingly important role in the way in which products and services are purchased.
E-commerce systems such as your website can be used to market and sell to customers, and to provide after-sales support. E-commerce can also be an important part of strengthening relationships and improving the efficiency of your dealings with suppliers and other key trading partners.
The set of tips described below looks at the key issues to consider when planning for the introduction of e-commerce. It provides advice on how best to identify the opportunities for e-commerce within your business and the solution |