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Companies often invest in growth when they hit their financial growth. When demand consistently exceeds supply, it allows for risky opportunities to emerge. One of those risks is diversifying your revenue streams by launching new products. Although it is popular and has the opportunity to win a high prize, this does not always work as planned, and the new product presents special challenges to overcome. If your company isn’t ready for drastic change, you’ll be at a loss. That’s why you should be prepared to ask yourself five critical questions before you scale your product.
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1. Is there proof of concept?
Ask yourself questions like: Has your new product been in any industry research or testing? Does it already exist, and do you believe your company can upgrade it at a competitive price? If you’re in a position to scale, chances are you’ve generated enough revenue to invest in product testing. Before committing to a new product, it’s a good idea to develop and reference a proof of concept.
This may mean shifting some of your financial resources to research and development. Having the product in a discreet and controlled pilot phase allows you to thoroughly test it and explore the full list of pros and cons. After mass production, it’s best to find out if your product “has legs” in the testing phase. If all goes well and you’ve identified an attractive target market, you’ll be in a better position to move forward and attract support for making public announcements. In your worst case scenario, you might lose a sleeve, but you’ll keep the shirt.
2. Did you get along?
It doesn’t matter if your new product is revolutionary if your team isn’t motivated to change the working model. It helps if you understand that the next step in your team is the right step for the company and its employees. Otherwise, you will end up with low productivity and low morale. Remember that your employees know your business better than you do. You have a responsibility to be clear about the way forward, whether there will be sufficient recruitment and what support will be available. You are also responsible for providing feedback. If most employees are skeptical, you may want to think twice before moving forward.
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3. Are you ready to deal with the change?
Conduct a full assessment of your organization and plan what infrastructure development is needed to be able to produce your proven product while still growing. Which parts should be expanded? What kind of technology do you need to acquire for production? What does marketing look like? You essentially double the workload, which means you have a viable timeline to account for change management.
To do this effectively, you need a solid business plan and an acquisition plan to back up the resources. If you don’t have the capacity to grow smarter, your chances of success are slim. A well-oiled machine is needed to work for a long time. If you don’t remove the whole machine it will rust and eventually break. Fixing your course midstream is always difficult. You are better off being proactive in your planning and realistic about what, how and when you can make your change.
4. Does the change align with your brand?
I don’t know about you, but I don’t buy medical equipment from a bakery. When you enter the business, you choose an industry. I’m not encouraging anyone to branch out into different fields, I’m just saying it should make sense.
There are very few Yamahas in this world, and they only became so after making a series of logical product variations. Originally established as a piano and organ manufacturer, Yamaha positioned music as an important part of life to enter the overall lifestyle market. From there, he expanded into the sports lifestyle market, upgrading his acoustic pianos to electronic keyboards, and then designed acoustic support for electronic keyboards. Following this, they are increasing their electronic capabilities by expanding the scope of their musical instrument products. Soon they moved to the general electronics area and entered the field of communication solutions. Today, the brand brings all these things together in a very clever way, with one thing in common: Yamaha-make waves.
If your new product is not on brand, you will confuse your customers. They know you by the success of your first product. Introducing a new product outside of your business can lead to questions about qualifications and expertise. Even if you make all the appropriate hires and bring in top executives, consumers will question your move.
If you are a public company, this can increase your stock price. If you’re off-brand, you’ll likely lose more customers than you’ll gain. Make sure the narratives you’re crafting around the new product connect faithfully to your company and the core product. Remember that the new product is relevant to your organization’s mission, vision, and overall goals.
5. Can you survive defeat?
When businesses differentiate their products, failure is par for the course. Make sure your business has a healthy reserve in case of storms during manufacturing, distribution and sales. You should always have some sort of safety net to cover your losses – and enough to ensure that the business can continue if you pull the plug on your new product.
Risk management is a big part of development. Of course, you can’t blame everything, but you can certainly minimize losses and plan for contingencies. If you can’t meet projected profit targets, or if a public recall of the product is required, or if competition cuts into your markets, you need to be able to stand still when the dust settles, accept the setback, and focus on it. in the future.
You can only do this if you are ahead of the game financially and have a plan for winning and losing. If you can survive another day, that alone will ensure the success and sustainability of your company as a whole, even if you can’t risk another attempt to diversify your revenue streams. You may need time to rebuild any lost consumer trust.
Related: How to Diversify Your Business Interests
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