When it comes to the products or services you sell, it can be hard to find the perfect balance.
If you offer too wide a spread of items for sale, you can dilute your market. In other words, you can offer a lot, but not be a specialist in any one thing, and therefore become a generalist. Not a great selling strategy.
On the other hand, if you narrow your focus too tightly, you can miss out on other opportunities for revenue. A small market only has so much market potential, so how can you grow from here?
Whether to diversify products or own a niche is a decision you’ll have to make based on your answers to the following questions.
How Big is My Existing Market?
If you have a market big enough to support you in buying a small range of products, stick with it. Having a niche market can keep you knee-deep in sales … but only if there are enough people in your market to support your business.
If you sell bedazzled dog collars customized for female Chihuahuas under one pound, you may limit yourself in how many of your products you can sell, compared to a company that sells dog collars for all sized dogs.
Can I Support a Wide Range of Products or Services?
The more you sell, the more you have to manage. If you sell products, that means more inventory orders and more attention paid to what’s selling and what’s not. If you sell services, you have to get really good at delivering more solutions, which can be difficult.
If you’re a one-man or one-woman show, you might find it a challenge to spread yourself so thin. On the other hand, if you have the staff, you could feasibly have one person to manage each product or service category.
Would My Customers Buy Additional Products?
If you know your customers, you can probably determine whether they would be interested in buying other similar products or services. If you sell coffee, you could probably sell muffins. But the key here is knowing your customer and keeping your offerings related.
For example, if you sell coffee, you probably couldn’t sell flowers or umbrellas as easily, since these aren’t complementary products to your coffee the way muffins are.
Will Expanding My Product Line Increase My Sales?
It might and it might not. If customers have been asking for other products then yes, you can probably sell them. But if you just decided one day to expand for no good reason, you’ll probably only add to your headache by increasing what you have to manage.
Can I Continue To Deliver Top-Notch Service If I Expand?
A lot of entrepreneurs fall into the trap of trying to be all things to all people. Rather than be experts at delivering a particular product or service, they struggle to deliver items beyond their area of knowledge. That’s a good way to push customers away: by delivering a dearth of lower-quality products or services.
You know your niche. You know your customers. Based on what you know, decide whether diversifying your offerings is a good idea or not. You can always test out expansion by offering one additional product or service at a time, seeing how those fare, then deciding whether to keep expanding or pull back.