Why you should have a range of goods and services
In small business, opportunities will come along for you to offer new products and services.
Growth can be achieved by providing excellent customer service, and this can take time as you build a reputation for being so good at something that people find it hard to ignore.
Achieving growth with new products and services is different in that sometimes the market might demand this. Often, if you can get this right, it can bring a big increase in sales.
Of course, you have to be able to deliver and execute these new goods and services and this isn’t always easy. While you may be able to identify a gap in the market for a new product, it still may fail.
New services on the other hand can be demanding and might overstretch you. Part of the answer is you can charge a higher price, but this can't hide inefficiencies in execution.
Should you pursue these opportunities when you spot them? This is a complex question and the answer is that you should, but with caution. Sometimes the costs associated are much higher and hidden. It is easy to get bad advice.
In business, it's always good to be able to provide a range of goods and services as this moves the risk around to many areas and not just one. If TV sales are down, vacuum sales might be on the up.
When I was Commercial Manager at James Hardie, new house sales were down, but you could always be sure renovations were up. This way, risk was spread around amongst products and with each of these groups there were several ranges of products, such as products that supported cold weather and products that supported hot weather.
My view on this is to have as many services and products as you can, provided you have the capacity to deliver.
Sometimes a new product or service can take several years before it recovers its cost. It’s important to ask the market how much they want that service or product and how much they are prepared to pay.
Always try and sell complimentary goods and services. You have heard the line: “if you sell butter you might as well sell Vegemite”.
As a general rule, the more vertically integrated you are the better chance your business has. Of course, it also gets back to how good your systems and management are to enable a vertically integrated business to run well.
A good example of this is Len Buck ridge in Western Australia, who not only built houses but owned most of the manufacturing factories that made the products.
A bad example is the banks moving into financial planning who appeared to have executed the very well, however this doesn't mean the strategy was wrong it just means the execution was and this is an important point.
If you're unsure of an opportunity, it may be a good time to visit your local TaxAssist Accountants store and discuss with us what might work and what might not. We do have the benefit of seeing what’s worked and what hasn't over many years.