Growth is central to the strategies of most entrepreneurs. It can be the one thing that challenges us and drives us the most. In our pursuit of new growth, we are are keen to evaluate new products, new geographic regions, new partnerships and even new markets.
Expanding into a new vertical — taking your existing product or service into a new market with an untapped customer base — can be a viable path to increasing revenues and meeting top-line growth objectives.
Related: 5 Tips for Handling Rapid Expansion
But when is such a move the right strategy? What are the primary considerations for deciding whether to enter a new vertical? My recommendation is to start with evaluating your strategy and answering a series of questions that focus on why, what, when and how.
Why are you exploring vertical market expansion?
Expanding into a new vertical can be harder than starting a new business initially. Why? Because typically businesses looking to expand in this manner have already established themselves, their teams, their products, their business model, their operations and their vision within a specific domain — making adaptation unnatural and complex.
Knowing that expansion of your business in any sense is rarely easy, you should ask yourself what’s driving your decision to enter a new vertical. Will it allow you to tap into a new customer base to drive new revenues or increase market share? Will it help you gain an edge over your competitors? Or could it be that it helps you drive increased diversification. Perhaps it is a way to strengthen your overall company positioning or reinvigorate your employees and increase retention.
Having clarity around “why” you are pursuing this path will help you determine whether there’s a good, quantifiable reason to justify the resources, time and effort involved.
How to Determine If Vertical Market Expansion is Right for Your Business
