How to Grow Your Business Strategically

0:01Hey everybody, it's Nick and last time we did this, it went really well. So we're doing it again. We have some notes that you can have and download and reflect on about the content of this episode. You can get them at businessaccelerator.com slash SGM, businessaccelerator.com slash SGM. And that stands for a strategic growth matrix. So these are some notes that you can use to internalize what we've talked about on today's show. And you definitely want to get it because you want to help grow your business strategically. So there you go. Businessaccelerator.com slash SGM.

1:02Hey Meg, how you doing? Hey Doug, I'm great. I'm excited to talk about our topic today. I am too. This is called the Strategic Growth Matrix. It's based on the Ansoff Matrix. And basically as a business owner, you've got four strategic options when it comes to growth. And I've rarely met a business owner that doesn't want to grow. Everybody wants to grow their business. And the reason for that is because it means more impact. It means more sales, more profit, whatever your reason is. But there are only four possibilities, and that's what we want to talk about. Well, of course, there's a matrix.

1:43I don't think anybody has ever loved a matrix more than Michael Hyatt. And I, as someone who shares half of your DNA, also love a matrix. But I think a matrix, when I think about it, is just like a nifty little box to put things in. And I, for one, love to put things in a box at my house. I have all my shoes in those little clear boxes from the container store. And I feel like this is the business version of that. So that's fantastic. What I love about what we're going to get into today is that there is smart growth that's really oriented toward profitable, efficient growth. And then there's growth that's less efficient and sometimes less profitable and definitely riskier.

2:24And I think that this is one of those things that as a business owner, it's easy to not even think about it all, not put things in this category. And this can become a filter so that you make sure that the way you're growing ultimately is going to drive profit, efficiency, joy in your work, all those things that we really want as business owners. Well, and the cool thing is that you could download this worksheet, this cheat sheet, and have a conversation with your team about it. Yeah. And just look at what your strategic growth opportunities are. And I find myself hauling out this matrix whenever we talk about growth.

2:59Because, again, there's only these four strategic options. And, again, if you imagine it as a matrix, and you'll see this clearly in the tool when you download it, but it's a two-by-two matrix. One axis is products. One axis is markets. So you can grow your business through new markets. You can grow your business through new products. but it creates four boxes and that's what we're going to talk about. We're going to talk about the simplest one first, which is strategy number one, market penetration. Now, here's what this means. This means you're selling more of your existing products to your existing markets.

3:36And frankly, this is the least risky option because you don't have to invest capital or other resources into developing new products or new markets. And Megan, what I'd like us to talk about here is just some of the tactical options that are available to us. For example, you can reduce the price so you can make your products more affordable to more of your market. You know, maybe you decide that, yeah, we're going to make a little less on each product, but we're not only going to make it up in volume, but we're going to exceed it in volume because we've lowered the price. That's a way to grow with strategy one.

4:12Well, you could also create a buy one, get one free, a BOGO offer. So that's another option. You could create a seasonal or holiday offer. You could create a frequent buyer program or a subscription program, something that we've done with our full focus planner. You could bundle products so that people pay less for each product, but have a higher transaction value, average order value. You could increase your marketing spend or change your strategy. You could upsell people that are already your customers to higher priced products, or you could downsell those same customers into lower priced products.

4:51But I think the big idea here is you've already acquired the customer. You've already paid, whether that's through paid advertising or other advertising or sales team or whatever, you've already paid to acquire these customers. Now you're really trying to drive their lifetime value and their average order value by having them purchase more things. You know, this is easy, I think, as a business owner to get maybe just a little bit bored with this. Yep. And to basically jump out of this quadrant before you've fully exhausted or fully exploited, in the best sense of the word, the opportunities are there.

5:28And the problem with the other strategies that we're going to lay out is they do require some investment. Yep. But you've already invested in your existing products. you've already invested in acquiring your existing customers, the first thing you need to do is just try to sell more of your stuff to them. So in our case, we have the full focus planner. How many of those people are aware of our coaching program? You know, a lot of those people still to this day have no idea that we have a coaching program. I mean, it may sound inconceivable because we talk about it all the time and you listen to the podcast and you hear it all the time, but there are lots of people.

6:00In fact, as it turns out, a vast population of people that don't know anything about the coaching program. Conversely, and I don't think this is the case, but there are people that buy other products of ours, probably not the coaching program, who are not familiar with the Full Focus Planner. So before we go exploiting new markets, before we go developing new products, we need to ask ourselves the question, have we harvested the fruit that is in this quadrant already? This is where memberships and subscriptions really come in. You could consider, like we did, if you have a physical product or if you have some kind of an information product, how could you make that a subscription where people are buying the same thing that they're already buying from you?

6:43We have people who buy the full focus planner once a quarter because they're using it on a regular basis. It's a consumable product, but they're not actually subscribers. Well, we want those people to become subscribers because then we're automating those repeat purchases. I think a subscription model is the best example of this strategy, number one, market penetration, because you're really maximizing the value of those customers in a very easy way for you and an easy way for them. Another opportunity within this quadrant is basically to upsell people when they buy one thing. Everything you sell should sell something else.

7:23So, for example, if you go to the back of the Full Focus Planner, there are ads for other of our products. Even if you go to my books, it's the same case. So I think that's an opportunity that we've got to make sure that we're always selling if we're going to optimize this market.

7:44Let's go to strategy number two, which is market expansion. This means selling your existing products into new markets. And this is typically the next least risky option. You don't have to invest capital or other resources into developing new products, so you may have to invest some in finding new markets. But let's talk about a few tactical options, and I'll just start with the first one. Expand, and this is easy, expand into geographical locations. Easy to understand, maybe difficult to execute, but expand into new geographical locations. For example, it may be other locations in your city if you have a retail business.

8:23It could be other cities. It could be other states or entirely new countries. You know, go international with your product, something we're considering right now with the Full Focus Planner, but expanding into new geographical areas. Well, then there's also expanding into new sales channels. You know, for example, direct-to-consumer, business-to-business, online sales, retail sales, mass market merchandisers, specialty stores. You know, how can you access places that you haven't gone before? For example, with the Full Focus Planner, we a couple of years ago started selling those into organizations and really doing training and other wraparound services to train people at an organizational level and how to use the Full Focus Planner as kind of their productivity operating system.

9:11And that was a new market for us, which was fantastic. The cool thing about doing this strategy number two, market expansion, is that you've already learned a lot about your customer. You've already learned a lot about what it takes to make your product succeed. And so the risk is just testing a new market, but you're not trying to test too many things at the same time. You already have a lot of institutional knowledge and expertise around your product and what it takes to make that work. So that's part of how we help to minimize the risk here. Here's another tactical option is to expand into new customer verticals.

9:46So let's say that you've built up a practice of helping dentists build their professional practice. And you think, you know, everything I teach is directly applicable to doctors, to lawyers, to wealth advisors, to other financial professionals. And so adjacent verticals can also be a way for you to expand the market. Or I think about how Apple did this back in the early days where they, you know, initially had kind of a, you know, a high-end product. And they said, you know what, there's, you know, this is great for professionals, but there are probably power users that would love to have access to this.

10:26So you may move down market or you can move up market. You could say there ought to be a professional version of this. You see this with a lot of software where there's just the basic version. Maybe it's even free. But to get the pro version, you have to upgrade. And so that's another way to expand the market with essentially the same product, maybe a few product tweaks, but not much.

10:54Okay, let's go to strategy number three, product development. This means selling new products into your existing markets. So the truth is, you've got a relationship with your customers. they hopefully know, like, and trust you. They want to buy more stuff from you. And I can remember years ago, I had a conversation with Jeff Walker, who wrote the book Launch, who's the creator of the product launch formula. And he said to me, he said, your customers want to buy more stuff than you're currently producing because they trust you. And they believe that if you've vetted it or you recommend it, that it's valuable.

11:32And so they want to avail themselves of that opportunity. So there's a couple tactical options. Again, this is the next least risky option. You don't have to invest capital or other resources into developing new markets, though you may have to tweak your products or add additional products. But here's some tactical options. What is to expand into new formats? So you think of what's happened in the book publishing industry. You know, you've got a traditional hardcover book. What about if we put it in paperback for the international market? What if we put it in digital form in the Kindle for people that want to read that way?

12:08What if we recorded an audiobook? So it's a new product format. We've done this with the Full Focus Planner, where we have a variety of colors, materials, bindings like coil or loose leaf or hardcover. But those are ways to expand it to new formats. Well, you could also acquire the rights to sell someone else's product to your existing market, or you could become an affiliate. You know, when you're taking a commission on things that you recommend to your audience that you know are relevant, that can be a great way to develop a product without actually developing a product. You know, but you're still satisfying the need, like you were talking about with Jeff, when people want to buy things from you because they trust you.

12:52Those things don't necessarily have to be your own proprietary original products. They can be other things that you're recommending that you really believe in. But you've got to be careful with this. You've really got to make sure you vet these things, that you have tested them personally, and you really love them, for this trust to be improved by the offering of new products that are someone else's. You know, I just thought of another thing that Jeff said to me that's apropos here. He said 10 % of your customers want to pay you 10 times as much for more access to you or a higher quality product.

13:27And I don't know if those numbers are exactly right. I don't know if you could validate them scientifically, but directionally, it's right. And we've certainly proven that in our own business. So another option is to create a higher-end or a low-end version of your product. And I just saw in our Facebook group, the Full Focus Planner Facebook group, where somebody was asking for a softcover version of the planner. Now, I don't know if we'll do that. I mean, it's one request among hundreds, but that's a lower-end version of it. And I think if we thought there was enough opportunity, we would probably do that.

14:00But it could be a higher end also. You know, if you go to an auto dealer and you're shopping for a new car, you know, there's kind of your base version, you know, sort of the average version of that car. But there's usually some kind of high-end, souped-up version of it too. And that may make sense in some businesses to offer that high-end product. Well, if you're in a services-based business, this could look like, you know, you have a DIY option. you have a done with you option, and then you have a done for you option. And those are, you know, kind of escalating pricing tier. People obviously would pay the most to have something just done for them.

14:37You know, if you're a web developer or something like that, that could be a great way to increase the reach of your products by adding some additional products or some additional services to the products you're already offering that help people to have less of a burden of doing it on their own. Meg, do you think there's any temptation here or risk that you'll get overly creative and create too much stuff? First of all, is that a rhetorical question? And why are you asking me that? In my experience, both with us personally and with many of our clients, absolutely. In fact, I would say nine times out of 10, if you're a business owner, you're going to go to strategy number three when you think about growth first.

15:21What else could we make? Because making stuff is the fun part, right? you're probably a person who likes ideating who likes coming up with new things like shiny and new is your favorite you know if it's a day you get to do that it's a good day but you get to the place in your business where this is like dumb growth I mean I'm just gonna say it that way you know you can have smart growth and you can have dumb growth and you can really find yourself tangled up in some very inefficient growth because what can happen is you're always creating things and you're never optimizing anything and you're not driving profitability and you're not going deeper into what you have and continuing to make it better.

15:58You're just kind of chasing the next new shiny thing. I know we did that at one period and we have really been very intentional over a number of years of narrowing, narrowing, narrowing our focus so that we can go deeper instead of wider. And so there's certainly a place for new products. You know, there is absolutely a new place. But I think as business owners, we have to have the discipline to take that excitement around optimization or that excitement around creating something new and apply it to optimization rather than just always going for the new things. Because otherwise, we'll just drive everybody crazy, including ourselves.

16:34Totally. And as you were talking about that, I thought, you know, if you're not careful and you go too crazy and there's no guardrails, you dilute the focus. Everybody gets distracted. Nobody really knows what to work on because you've got so many products. You introduce complexity into your business, and you introduce a lot of cost. You know, there have been expansions to the full-focus product line, for example, the planner line, where we have added a bunch of new, they call them SKUs, you know, stock keeping units, but different specific products that, you know, are sitting in the warehouse because they didn't sell that well.

17:10Somebody thought it would be a good idea or a good color, and it just didn't work that well. And I see Apple, particularly in the days when Steve Jobs was running it, as a good example of exercising the right kind of discipline here. You know, having a few options, but not going too crazy. And that's one of the things, and forgive me for those of you that are Windows users, but I feel like so often, at least in past years, Windows computers were sold with so many options that not only were you confused. I mean, think about it. Here's another example. Think about it when you buy a cell phone, you're trying to find a plan.

17:46There are so many options, so many products that it's just confusing. And the problem is, is when people get confused, they hesitate. And so you want to be very careful about keeping your product offerings tight and focused. So we're not opposed to adding products, and we're basically preaching to ourselves here, but we want to do it in a disciplined way that doesn't lead to that lack of focus, to that complexity, to that cost. Well, one little final thing to say here. If you think to yourself, oh my gosh, you guys are preaching to the choir. This is me. It's all I've done for the last few years is add a thousand things.

18:25Some of that is just a normal part of maturing and figuring out who you are as a business. And I think the discipline may, for you, look like pruning. And pruning is a natural stage or natural process. With any living thing, you have to prune. I mean, I love plants. I have plants all over my office. I have plants all over my home. And just yesterday, I went around with my little scissors and I snapped off some of the leggy parts that were getting out of control because I know that's going to divert energy and nutrients to the end of the plant. And it's going to become less full in the middle. It's going to be less beautiful because it's going to kind of be all over the place and too distributed.

19:09And I think the same thing is true with our business. It's okay if you have found yourself in that position. Now the question is, do you have the discipline and the courage and the clarity to go ahead and prune so that you can really maximize your growth going forward? So everything we've talked about in this quadrant up until this point, Megan, has been around tweaking existing products, maybe acquiring products from somebody else. But here's another tactic that you can use under strategy three, and that's to create brand new products before you have to be careful because it's going to require the most investment, but brand new products that solve other problems your existing customers have.

19:46This is one of the reasons we created the Full Focus Executive Assistant course, because we got our coaching clients and business owners saying to us, we need some kind of training for our executive assistants so we can have amazing executive assistants like you guys have. So we had our executive assistants and a few other executives record that course, and it's been a big hit. But that's an example of solving another problem that your existing customers have.

20:31Okay, you ready for strategy number four? Yep. Diversification. This is where you sell new products into new markets. And obviously, this is going to be the most risky option. Why? Because you have to invest capital or other resources in developing new products and new markets. So you only typically do this if you've already maxed out your existing products or markets, or if you want to reduce your dependency on your existing products, markets, or both. So this could be great. It could also be a distraction, but at some point, diversification might be the right strategy for you. So let's start with some tactical options.

21:14Meg? Well, you could start a whole brand new business. You know, you may be an adjacent business or it may be something totally new that you decide to start. And, you know, if you're a business owner right now, you probably just got really excited because if you like starting or creating a new product, you probably really like the idea of starting a new business. So, you know, tread carefully here. This is very shiny and very new, but you certainly can do it if the time is right and the opportunity is right. You could also buy an existing business that would complement your business. So I have another CEO friend who is in the process as a growth strategy of acquiring other businesses that are complementary to the business that they have.

21:53And that is a well-trodden path in terms of growth strategy and can be a really good one. The other is to acquire vertical integration. For example, a retailer starting or buying a publishing company, you know, or Apple really getting into the manufacturing of some of their products because that is enabling them to drive their cost down and secure, you know, the uniqueness of their product. You know, another example from Apple is when they went and started a retail chain. Yeah. You know, the typical arc of this, this is so interesting to me, and admittedly, I'm an Apple fanboy, so factor that in.

22:36I don't think you actually had to say that. I think we already knew that. Okay. Speaking of the obvious. Right. One of the things that happens with Apple is every time they enter a new product category or a new market, you know, the pundits just poo-poo it. Like, what do they know about retail? Well, apparently a lot because they have the highest yield per square foot of any retail operation in the world. They generate more sales, at least last I heard, per square foot of anybody. So they've been enormously successful at that. But they're very careful about it, right? So they just introduced this new artificial reality or virtual reality headset.

23:18And, you know, again, the pundits are saying it's crazy and they shouldn't be doing this and they're not the first and blah, blah, blah, blah, blah. But this is really the first new product category in about 10 years. So they're very careful that they don't just, you know, come up with stuff willy-nilly. And you just don't want to be in a position where you're starting a new business or acquiring something else because you're bored with what you've got. Or it's a way of escaping the problems in your current business. So be thoughtful. I think that's a really good caution because what you want to do before you get into diversification, because this will add complexity to your business, no question about it.

23:56You need to make sure that your core business is stable and optimized and functioning at the highest level possible before you use that as a springboard to go do something new because you're going to take substantial risk and add substantial complexity with this new whatever it turns out to be. And you don't want to do that where you have too many things going at the same time that are needing your attention. I think partly what is easy to underestimate here is not only do you have the capital outlay that's going to be necessary to develop new products and new markets, you also have to develop expertise in a new product and a new market.

24:37Whereas in the other examples that we've shared, it's one or the other or neither. And that's something to really consider. I mean, all the challenges that you went through to succeed in your current business, you're going to have to go through those same challenges, that same learning curve to ultimately succeed in whatever this new thing is. And that's part of the cost that you need to count. If it's worth it, great. But it's easy to just, especially as a business owner who likes to do new things, it's easy to discount how significant that is and underestimate it and then find yourself kind of kicking yourself down the road.

25:10Well, you know, one of the ways to mitigate that risk is to enter into a strategic partnership or a joint venture. So you basically find somebody that's really good at that. Like, for example, maybe you wanted to sell your products online and you realize you're not very good at that, but you could find somebody, Amazon, somebody else that could sell it online for you. or you want to get distribution in the mass market. So you find somebody that's a distributor that already has that expertise and you can work out some kind of relationship that's good for you and good for them and get your product into markets that you've not been in before.