MINDS4BIZ INCORPORATION

UNLEASHING THE ENTREPRENEURIAL SPIRIT
[You have many questions. We have answers to those business-related questions.]
Business-Related Growth Questions and Answers
Page no. 2b

B. TYPES AND STAGES OF BUSINESS GROWTH

9b6. When should a company or organization consider expanding into new geographies with its products or services? [New Geographies]

A company should consider expanding into new geographies when it meets specific criteria, including:

• Demand: The product or service is in demand in other markets. This could be from customers outside the current region or customers traveling long distances to reach the company.
• Financial Stability: The company has the capital to fund the expansion through cash reserves or access to credit.
• Loyal customers: The company has a strong base of loyal customers.
• Positive cash flow: The company has consistently increasing revenue and positive cash flow.
• Solid Team: The company has a team that can keep operations running smoothly while focusing on expansion.

Other factors to consider include:

• Cultural Fit

The company should consider the cultural compatibility between its product and the target market.

• Local Regulations

The company should understand the local regulations and requirements, such as import and export regulations, product regulations, and safety standards.

• Economic and Political Stability

The company should consider the economic and political stability of the region.

Expanding into new markets can help companies scale but can also lead to financial distress. Companies should develop a robust strategy for winning in the new geographies and allocate enough resources and time.

9b7. What does the share of wallet mean regarding business growth strategy? [Share of Wallet]

Share of wallet (SOW) is a marketing metric that measures the percentage of a customer’s spending that goes to a specific company within a particular market or category. It’s a key indicator of how well a company performs against its competitors and the strength of its customer relationships.

SOW can help businesses understand customers’ preferences, behaviors, and purchasing patterns. It can also help answer questions like:

• How do customers rank a company relative to its competitors?
• How loyal are customers to a brand?
• How can a company cultivate closer ties with current customers?

Here are some examples of how businesses can use SOW to grow:

• Cross-Selling

A bank can increase its share of wallets by selling complementary products and services to existing customers. For example, a bank might refer a wealth management client to a mortgage representative when the client is looking to buy a home.

• Upselling

A retailer can increase its share of wallets by suggesting other products and services to customers already in the store. For example, McDonald’s might ask customers if they want to upgrade to a combo or add fries to their order.

• Adjusting Marketing Strategies

Businesses can use SOW data to adjust their marketing strategies, including product and service attributes and marketing communication efforts.

• Asking customers why they prefer competitors

Businesses can ask customers why they prefer a competitor and use that information to improve their ranking.

9b9. What is the procedure for diversification and growing a business or organization? [Diversification]

Here are some steps you can take to diversify and grow a business or organization:

• Assess your current situation: Consider your resources, goals, and options.
• Research and analyze your target markets: Find out what your customers want and what your competitors are doing.
• Identify areas of strength and weakness: Use management accounts to understand your financial performance and where you can improve.
• Choose a diversification method: Consider expanding into a new market, improving existing products, or adding similar products.
• Plan and execute your strategy: Develop a value proposition and establish clear structures and processes for managing the new venture.
• Manage risk: Diversification can increase risk, so you must balance focusing on the new venture and your core business.
• Set realistic expectations: Prioritize value creation over short-term gains to maintain stakeholder confidence.
• Learn from setbacks: Adopt a learning mindset and analyze setbacks to improve your approach.

Here are some types of Diversification:

• Horizontal Diversification: Add products or services that complement your core business and appeal to your current customers.
• Vertical Diversification: Integrate your products into your supply chain to strengthen and reduce production costs.
• Mergers and Acquisitions: Acquire or merge with a rival business.