Uncovering New Markets for Growth
By Peggy Tierney Galvin, Force4 Technology Communications
When it comes to expanding a business and building capital, some of the most common methods leaders will use include signing new deals, increasing the scope of existing deals and reducing operating costs. Another way is by finding new streams of revenue, which can be any combination of selling new goods/services to new kinds of customers in a new way.
A classic example is when Amazon began to sell space in its data centers to other companies as a new revenue stream alongside its traditional e-commerce business, thereby creating the AWS profit juggernaut and exploding the cloud services industry into existence.
What’s hindering expansion into new markets?
New markets can deliver exponential returns on investment, too. Although it’s a great way to make additional capital, business leaders are sometimes hesitant due to:
- Risk aversion – retrenching and sticking with what you know
- It’s expensive, without any guarantee of success
- Globalization has decreased barriers to entry, making new markets more accessible to competitors from emerging economies with lower labor and operating costs
Overcoming the hurdles
Although hesitancy may be ever-present when looking to expand into new markets, reducing the risks associated with the transition is possible with proper research. Reading the news is critical. Understanding the macro trends that affect technology markets gives tech business leaders the insights that help them discern which new markets might hold opportunities, including:
Geopolitical trends – Are some countries going to become more expensive or difficult to do business in? Are they investing in infrastructure or sectors that make them more attractive places to do business? Do they have a young, growing and technologically literate population? Are they engaged in a trade war with other countries? Money is like water; how is it flowing around dams like interest and rising inflation?
Big player trends – There’s no shame in the copycat game, if you bring your expertise into the equation. What are the massive global companies investing in? What are they placing bets on? They might not always be correct, but it’s instructive to see what they’re betting on and where you can apply your own area of expertise and create a niche.
Your own customers – what are they asking for? What challenges are they facing and sharing with the sales team? This is a little tricky since we are talking about new markets. You’d have to pay attention to things they’re sharing with you that you might not be able to help them address today, but a customer that trusts you enough to share their broader challenges with can be your “aha” moment, since it’s probable that 1) they’re not the only one facing this issue and 2) they think you might be a good resource for helping think it through.
Determining which new markets may be right for you
The trick for evaluating new markets is two-fold. First, see where the investments are flowing, and second, evaluate whether your existing business setup and expertise could be extended to carve out a niche in one of these new spaces. Consider the strengths, expertise, relationships, and infrastructure you already have at your disposal.
Keep your eye on investments and forward movement in public infrastructure, like utilities (electricity, oil, gas, water) and transportation (shipping, logistics, roads, construction, EV charging networks). For instance, several federal and state initiatives have been passed in the last few years that will pump billions into the economy. These initiatives are aimed at modernizing and electrifying the nation’s power grid and moving manufacturing of semiconductor chips, electric vehicles and electric vehicle batteries to the U.S.
New opportunities for tech companies are in the nascent tech ecosystem that will be built around them and the downstream “tomorrow” opportunities that bubble up when shrewd entrepreneurs have “eureka” moments of inspiration by seeing the potential in connections that no one has made before.
Prepare for growth
Moving into new markets may seem daunting, but it does not have to be. This move starts with doing your due diligence, which includes paying attention to global trends and the needs and wants of your customers. Look at who is investing in what and whether your current resources might fit in one of those areas. With savvy planning, your company could be on its way to new revenue streams.
Stay tuned for our next blog on penetrating these markets.