Have you considered adding new lines of business to help you grow revenue in your small business? Are you giving consideration to the pros and cons of doing this? Many small business owners think that adding a new line of business will help them increase revenue, and in most cases they are right. Others have found out the hard way that adding additional products and services impacted their business in a negative way.
Having multiple product or service lines is a definite plus as it relates to diversifying risk and capitalizing on the established reputation of current products and services. The ability to attract different market segments with new lines of business could generate a lot of incremental revenue for your small business.
On the downside, however, is the potential that new products and services may erode revenue growth from your current product line. A key element in deciding to expand your small business by adding new lines of business is to understand the “life cycle” of each of your products and services. Some products or services, which had great revenue growth in the past, may be declining. Knowing this by tracking sales for each of your product and service lines is critical.
Replacing slow-growing products or services with new lines will generate more growth potential for your small business and will allow you to continue to grow your small business. Many small businesses have gone through this transition many, many times over their history and today are selling a completely different product line than when they started.
When considering adding new lines of business, consider the pros and cons of doing so before pulling the trigger!