"Grow or die" is a familiar phrase to anyone who runs their own business. It’s probably never been truer than in today’s marketplace, where change occurs at warp speed. As the horse business owner or manager, you brainstorm, hear about, and consider a multitude of new ideas to enhance your business regularly. How do you decide which ideas are worth pursuing, and which need to be put back on the shelf? Understanding how businesses expand gives a starting place for this process. There are four ways to expand your horse business.
MARKET PENETRATION – With this method you are looking to increase your sales within your present market. Whatever it is that you offer – lessons, tack, horses, etc. – you’ll brainstorm ways to sell more. Examine ways that you can get your current customers to buy more frequently. Package offers, specials, and convenient payment methods assist here. Another way to increase market penetration is to consider ways to attract your competitor’s customers to your business.
MARKET DEVELOPMENT – How can you sell your current offering to new markets? One way is to break beyond your current geographic area. Another way is to try a new marketing media. If you typically advertise with your regional horse papers, perhaps you want to give a direct mail campaign a try.
These first two methods are the safest ways to build your business. They entail increasing customer usage of a product or service you already offer, so it is a product you know very well. It has already proven itself on the open market. The third method means increased risk for your business.
PRODUCT DEVELOPMENT – Your business grows by offering a new or improved product. To understand the risk here, consider the hoopla surrounding Coca Cola’s attempt to offer a new improved version. The market place clearly responded that they primarily wanted Coke Classic. But Coca Cola was still able to add the new Coke as a new product to their product line. Examples of products you could add are: a massage therapist can also sell videos and books about massage; tack shops open new product lines with new distributors; instructors can add coaching at shows, video taping of lessons; a barn that offers boarding and training may add horse sales
The fourth method of expansion carries the greatest risk factor.
DIVERSIFICATION – This method will see your business moving into a totally different business. The reason your risk is the greatest here is that you will be dealing with new products and new markets, so your knowledge and experience in these areas is all new, creating a higher level of uncertainty. Examples include: buying an inn or hotel if you own a stable; a riding instructor decides to sell computers; a farrier decides to offer motivational seminars in and out of the horse industry.
While your business is young, your best bet is to get some experience with the first two methods. As your business stabilizes and matures, the latter two methods may offer just the expansion opportunity you’re looking for. No matter what choice you make, it’s always a best to do a market strategy analysis first. You’ll discover strengths, weaknesses, holes in the market, and obstacles that will help refine your offering as well assist in your decision whether to go this way at this time.
Contributed By: Lisa Derby Oden