Where Opportunity Lives – Part Two
by Dan Walsh
“If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success.”
-John D. Rockefeller
This is the second half of Where Opportunity Lives. In part one, I listed five places to find potential business growth in existing infrastructure. In part two, I focus on expansion opportunities.
Part Two – Expansion Opportunities
6. New Verticals
Could you do the same kind of business in a new space? If you have a burrito chain, could you start a pizza empire? Chipotle thinks they can. Apply everything you know to another area where people spend money. Turn a dog toy into a cat toy and double your business.
7. Mergers & Acquisitions
Can you buy a direct competitor and acquire their market share? What about purchasing a company that has a similar but non-competitive product? This is classic horizontal expansion.
8. Integrate External Services
What tools or services are you paying for? Could you build your own version? You’d expand your product line and remove a reoccurring cost. This could also be accomplished with an acquisition.
9. Productize Internal Services
Can you offer a tool you’ve already built for mainstream consumption? Amazon built a powerful web hosting infrastructure to facilitate their site. They’ve since spun out that entire infrastructure as an entirely independent product. Basecamp is another well-known example of a company offering their internal tools for public consumption.
10. Control the Supply Chain
Do you depend on components from other companies in order to make or sell your product? If so, you could increase profit margins and overall control of your business by producing these components yourself. Google is remarkable at this. They have hardware that runs their software that uses their browser which defaults to their search engine which serves their ads. End to end supply chain. Classic vertical integration. If another business has the power to undermine yours, that’s the first place to start.
11. Create Demand
Can you create a new market by providing the infrastructure that will lead to demand of your business? Rockefeller famously created demand for oil in China by introducing oil lamps as a superior alternative to candles. Once the Chinese market was hooked on better lighting, Standard Oil swooped in and locked down the emerging market before their competitors knew what happened.
This is by no means a definitive list, but it should help me moving forward. I tend to easily find opportunities for more volume (1), optimizations (2), and new verticals (6), but miss out on the other eight items. Referring to this list should enable me to spot more ways to grow our business.