Business Strategy: New Business Lines

Field_SkyDeveloping and introducing a New Business Line is nothing less than a daunting task. The good news is that many have gone before us, providing us with decades of exhaustive trial and error research that can help to identify successful approaches to establishing new business lines in existing companies.

I have found three common variables associated with business lines that have launched successfully: 

Three keys that lead to success in Developing and Introducing a New Business Line: 

  • The least expensive/most efficient way to bring a new service or product to market is almost always to target your existing clientele.
  • New service offerings that are similar to or an offshoot of your existing services increase their success rate and provide a shorter duration to profitability.
  • The best predictor of success is implementing demand-driven business lines that solve existing problems.

Developing New Business Lines

“60% of small-business start-ups fail in their first six years. Large companies … divest or close 44% of their internally generated start-ups and 50% of their joint ventures in the first six years.”   – Harvard Business Review

Incorporated SignThere is a right way and a wrong way to establish a new business line. In a recent post I identified three keys that lead to success when Developing and Introducing a New Business Line. After much research I have also found it interesting that the most common approach to developing a new business line is also the most common factor leading to the failure of that service line. The reason is that the ‘most common approach’ is to identify a new service or product prior to identifying the problem that it solves. This approach often looks like this:

The ‘most common’ approach to developing a new Business Line
1. Identify a solution
2. Identify a problem
3. Identify a potential client that may need the solution
4. Sell the solution to the client
5. Define and refine the solution
6. Package the solution

Let me again note that, while this is the most common approach, it is not the most successful approach. Given the shocking statistics related to the failure of new service offerings, it is important to pursue new offerings utilizing the most effective means possible in order to mitigate the potential losses from the failure of that new business line. Because of this I would state that the proper approach is to identify a problem that needs to be solved, then identify a solution to that problem which your new business line can provide. This approach should look like this:

The most effective approach to develop a new Business Line:
1. Identify a problem that your existing clients have
2. Identify a solution to that problem
3. Define and refine the solution, ensuring that it is the most efficient solution
4. Package the solution
5. Market the solution

As you look to expand your company evaluate your approach to ensure that you are not just coming up with new ideas, but that you are first identifying the problems that your clients have and working to develop ways to solve those problems.