One thing that keeps business owners up at night is whether people will buy what their company is selling. Ryan Hoggan knows that worry well. He has run several companies and now helps business owners expand theirs.
“There’s always that anxiety over whether customers will come,” said Hoggan, co-founder of the business consulting firm Imagine Growth Strategy in Sandy, Utah.
A recent Forbes Insights and Cox Business report, which surveyed 300 executives at small U.S. businesses comprising 5 to 15 employees, found that this is a common concern.
According to the survey, 22 percent of entrepreneurs found that attracting enough clients to support their company’s growth is their biggest challenge to scaling up. Twelve percent cited adequately supporting customers.
However, the survey also found that small businesses that have scaled up beyond a home office have seen an 84 percent increase in revenue, with 48 percent saying that the increase in top line has been due to a change in access to customers and clients.
Small businesses do want to grow — 58 percent of owners said customer expectations and needs were among the top factors influencing growth over the next three years.
But to expand in a smart way, you have to get over the fear that your new product or service won’t attract new customers. How? By having as much insight as possible into what your customers want and what opportunities will bring them through the door.
Conduct Market Research
The first step in assuaging fears about expansion is to do your research. Fortunately, in today’s world, much of that market-related information is at your fingertips.
According to the report, 25 percent of surveyed executives said that customer relationship management software, commonly known as CRM, helped ensure that their new business model would be a success.
CRM programs gather a treasure trove of data about current customers. They allow companies to track interactions, feedback and communications with customers. Mining that information provides a picture of how your current customers relate to your business and what new products they may want.
“Companies should be tapping into the data constantly,” said Alan Lewis, a managing director and partner in the Boston office of L.E.K., a global strategy consulting firm.
A simple internet search can also go a long way, said Justin Hartzman, co-founder of Needls, a Toronto company that has developed a technology platform for helping small businesses create and distribute ads on social media.
When he wanted to expand to Latin America, Hartzman went online to see how many small businesses were in the region. He also read through annual reports published by Facebook and Twitter to see how many Latin American companies are using social media services.
“I saw that there are millions of small businesses there,” he said. “It didn’t take long to see the market potential.”
Talking to people can help as well. At one conference, Hartzman met with someone from Brazil who provided insight into the country’s small business community. That person then put Hartzman in touch with someone else who explained the needs of those potential clients.
Test Your Offering First
Thanks to advances in technology, it’s relatively easy to test the market. A small retail company can use 3-D printing to get a few prototypes in customers’ hands. A tech company can beta-test a piece of software among a small group of people. A service-oriented firm can develop a website to gauge interest in an offering.
Hartzman is working with a small group of Latin American small businesses to try out his tools. He wants to see if the tools work outside the countries in which they are now being used — and in other languages. A central question is how much potential customers are willing to pay for their use.
Hartzman is also running his own ads on Facebook and Twitter, targeting Latin American companies, to see what kind of traction his 19-person company might get.
It’s slow going. But the work he’s put into researching and testing has made him feel good about expanding.
“We know we can do it from testing and talking to the right people,” he said. “We can take over market share.”
But until you build it, you’ll never know for sure if they’ll come. It is possible, however, to be reasonably certain that you’re on the right track.
“The No. 1 fear of any entrepreneur is if customers are going to buy a product,” said Hoggan. “Get a roadmap, have some numbers, and then you can better gauge your prospects yourself.”