Opening the Door to New Markets
This article by Dennis Sweeny was originally published in the KC Small Business Magazine.
Moving into a new market for a small business is a difficult proposition. It is similar to starting a new business and will take time, resources, and brainpower. Resources in a small business are limited, so deploying these resources to pursue a new market should be done thoughtfully and with a certain amount of organizational introspection. It is romantic to think about moving into a new market, but do not be fooled. To be successful long term, the whole organization will need to develop the understanding and skills the new market requires.
Get into the Market
Market research and executive analysis have their place; but to really determine whether you can be successful, your company needs to get into the market. Take your best salesperson and tell him or her you have a six-month project. The salesperson’s job is to develop relationships with five companies in the new market and to identify and establish relationships with the appropriate buyers and decision-makers in those companies. This may sound easy, but it is not. It will take a very strong and consistent effort from your salesperson to establish any significant dialogue with these new prospects.
The buyers and purchasing decision-makers in the new market are not waiting for a new salesperson to call. It will take a very aggressive and consistent effort just to get those people to talk.
Assemble a Team
Bring together three or four smart and talented people in your organization to work with the salesperson to assess the information that he or she is collecting.
These team members need to be leaders and need to understand your business, your capabilities and your finances. The president or a person in the executive management
team should be involved with this group, as well. Many small business owners believe that hiring the right salesperson is the key to moving into a new market. They are wrong. The resources of the whole company will eventually need to be involved and the expertise should be assembled early on to assess this information and determine if the new market should be pursued. The dialogue the salesperson establishes will give management a window into the needs and requirements of this new market.
Discussions among various departments and top management will allow you to understand the requirements of this new market. Large companies do business with small companies when they are convinced that the small companies understand their needs and are competent to meet these needs. The way for small companies to quickly develop this understanding is by openly discussing these needs internally and deciphering exactly what is important to a particular buyer or decision maker. Initially, the focus is not about making a sale but about developing an understanding of the new market.
Land the Project
Get the first project and forego profit if need be to land it. The initial goal of this project is to develop some experience where management can assess their organization’s ability to successfully compete in this new market. The best way to do this is to land a few projects and see how the organization responds to the demands of the new market.
Moving into a new market, especially in the beginning, requires the entire organization to overachieve and truly delight the new customers. Management has to understand this, and while overachieving on the first order, needs to assess the organization’s ability to meet the needs of these new customers going forward. It takes a tremendous amount of work and brain power to understand the requirements of a new market, and ultimately the whole organization will need to be positioned to serve it.
After this first phase is completed, management will then be in a position to decide whether they want to pursue this new market.
It is critically important to understand the importance of gathering information and analyzing this information to determine whether it is a good investment to build the infrastructure necessary to move into the new market. Salespeople may need to be hired, capital equipment may need to be purchased and working capital may need to be made available.
For a top management team to just assume they can move into a new market without some experience and analysis is a recipe for wasted resources. The good news, though, is that after management has gone through this process and decides to deploy the resources, they will understand exactly what it will take to be successful.