Have You Hit a Plateau?

Based on the results from the Business Assessment, it looks like your business may be slowing down. Even great businesses can hit a rough patch.  The trick is to catch it early before it becomes something bigger. 

All business is cyclical.  Sometimes we grow quickly. Sometimes we grow more slowly. The key is to determine if the current state is a temporary blip or if it is a warning sign.

Every business faces this challenge from time to time. Those that thrive figured out a way through.  We’d like you to meet one them.  His name is Louis.

Louis' Story

“My business had been growing well. I’m very happy with how well we’ve grown, but lately, we started to slow down a bit. I’m not sure what to do about this. Is it’s just a temporary blip, or is it  a sign that we’re hitting a plateau?”

Louis runs a successful retail and e-commerce business. He’s business has grown well, but it has showing the first signs of slowing down. He’s not sure if this is an indication of something bigger. He fears that he has maxed out his current customer base, but he’s not sure. He’s questioning whether there is more room to grow his current base or into which market he should expand next.

At one point or another, all businesses face Louis’s challenge. It’s often helpful to go back to the fundamentals to what working and what could use a refresh.

How We Helped Louis

Business Optimization

Few small business owners have time to optimize or to analyze their business fully. Many think, "I made a profit, so I’m okay." While this may be fine for now, eventually something unexpected happens. When it does, it's not immediately clear as to why. Is it a temporary blip or a sign of something more serious?

What we found:

First we looked at Louis's customer base. Based on his slowing rate of growth, it appeared that he had hit a point of diminishing returns with his current target.

It’s a common misconception that satisfying your customers is enough. And, that’s the first mistake that was hindering Louis. People are driven by our emotions. Louis had met the needs of those in his current niche. Unfortunately, he was starting to hit a point where there were few to add. Consequently, growth slowed.
pain-free delegation

Staff & Operations Evaluation

Louis' team and operations were working well. There were a few small items to optimize, but these were not the key drivers slowing his company's growth

Spending:

Louis' advertising spending was becoming less effective. His repeat business was strong, but the cost of acquisition of new customers was rising. This was second indicator that he was hitting a plateau with this niche. He either needed something new to increase the purchases of his repeat business or consider expanding his niche to adjacent markets.

Results of the Review

It was pretty clear that Louis' slowdown was due to diminishing returns within his current marketing target. It was time for him to consider expanding into new markets or offering a broader set of offerings to his current target

Key Considerations in Expansion:

There are 4 areas to consider when it comes to market expansion.
The first is vertical markets. For example, if you were selling bandages to hospitals, how could you up-sell by providing add-ons?
The second is new geographical markets. For example, if you operate in New York City, perhaps you expand into New Jersey.
Third is new products/services, which is self-explanatory.
Finally is adjacent markets. For example, selling the same bandages to consumers as you do to hospitals.

4 Tips for Expanding Your Small Business into New Markets

From everything that we uncovered, it appeared that Louis has hit the point of diminishing returns within his current vertical.  He already had a range of products. There didn’t appear to be a lot of additional head space for growth here.

Louis was an e-commerce based business. Therefore, geographical limitations were not significantly impacting his growth.  He was predominately US and Canada. Perhaps, he could do more to expand his business in other geographies, but they were cost prohibitive from a fulfillment perspective.  It could be something to explore in the future, but wasn’t seen as viable immediately.

Like we said, Louis had a pretty good assortment of products.  This could be a means to continue growth, and we put it as part of his long-term strategy.  Since product development, testing, and launch are both costly and time consuming, it wasn’t the first step we needed to take.

An adjacent market would be selling the same product to a market close to the one you are operating now.   For example, if you are selling bulk paper to schools, it’s not a far stretch to sell bulk paper to businesses, etc. It generally requires only minimal changes to your value chain.  This was the area that we felt could be easiest short-term means to revitalize growth

Louis' Revitalization Plan

We recommended the following 5 steps:

    1. First, secure funding for the investment required to make the necessary changes to the e-commerce storefront, website, etc.  Louis was in great shape, so an SBA loan was the obvious choice
    2. Use the funding to build the website and supply chain infrastructure
    3. Spend some money in market research to understand the emotional needs and drivers of the adjacent market
    4. Develop, test, and optimize our marketing message to the new target
    5. Launch the updated enhanced website and e-commerce store front

This wasn’t an cheap project. It took time to get the loan, do the research and testing, and finally to build the infrastructure.  But Louis came to us at the right time. His business was healthy so he could afford the time needed to do this right. I did take 9 months to fully execute this plan, but after being live for only a few months Louis was able to revitalize his growth and get his business back on track.

How can we help you?

(646) 543-7804

available from 9:00 – 5:00

Address 505 W. 37th St. New York, NY 10018

Email contact.us@prostrategix.com