By Garry Hojan
Our Solution
My first question back to you is: Why are you thinking of expanding into new related industries?
The reason I’d ask is because there are many reasons not to expand, like the following:
- trying to get out of a struggling market for something “easier”
- following others without a deep market understanding
- solely chasing potential high-profit margins without knowing the long-term viability
- entering with poor market research
- having not planned adequate resources to compete effectively
- trying to diversify without a clear strategy and;
- expanding simply to appear larger without staying within core competencies
Before deciding to diversify into a new or related industry, thoroughly investigate whether it is truly the best strategic direction for your company. Growth efforts within your existing niche pay a better return on investment than going after that new or related industry.
Considering the above, and assuming that you want to diversify revenue and not displace some key suppliers and that you have already performed market pre-screening for viability, you can expand into a new or related industry by:
1-Market research and analysis and identifying your target market
The space sector is estimated at $570B (2023), of which the satellite portion is estimated at $285B, and the global defense market is $2.4T, with the U.S. being $383B of that. Lots of money and players, drill down to your market and specialty as narrowly as possible and stick to what you already do that’s exceptional.
If you’re a wire harness assembly shop, don’t try to branch into displays and a new market; stick with wire harnesses and the new market.
Get familiar with the companies in the market. Everyone knows SpaceX because they get the media coverage, but there are somewhere between 4000 and 6000 space-related companies based in the U.S.
By the way, you can register your company as a SpaceX Supplier here: https://www.spacex.com/v2/supplier/submit. Apparently, they’ll call you if they need you.
2-Adapt your product or service to the new market
Evaluate your product or service’s fit for the new market by gathering feedback from potential customers and industry experts. Be aware of industry-specific regulatory requirements and other nuances that can help you customize your offering. Based on the customer feedback loop, plan for iterative improvements to your offering.
3-Plan your market entry strategy
Will you develop this new market expansion through organic growth or acquisition? Identify key partners and stakeholders who can help facilitate your market entry and provide valuable insights. Does it make sense for you to create a “pilot program” to test the waters before committing to a full-scale launch? Now is also when you should set measurable goals and success metrics aligned with your overall business objectives.
4-Go over legal and regulatory compliance
Research and understand the laws, regulations, and industry standards that apply to your business in the new market.
I’ve mentioned in the past that you should be familiar with the general regulatory and quality requirements. In the United States, space activities are regulated by the Federal Aviation Administration (FAA), the Federal Communications Commission (FCC), and the Department of Commerce, among others.
Incidentally, NASA does not regulate the space industry.
5-Develop your sales and marketing plan and resources
Develop a marketing strategy that resonates with your target audience, considering language and preferred communication channels.
Identify the most effective marketing channels and tactics for reaching your target customers, such as industry workgroups, trade associations, trade shows, social media, content marketing, and/or local events.
You’ll also need to build a local sales team or partner network to establish relationships with potential customers and navigate industry nuances. Create a customer acquisition and retention plan to deliver value and foster long-term relationships.
6-Consider your operations and supply chain for any changes that may be required
Learn about the specific industry and its specific supplier requirements, or partner with someone who already knows the industry well to boost the process.
Do you need to establish local operations and infrastructure, including office space, warehousing, and distribution centers, to serve your new market segment better? Do you need to address building out a more reliable local supply chain network, considering factors such as cost, quality, and delivery timelines?
Does your new market segment require additional transparency and oversight to ensure efficient distribution and logistics processes?
Pay particular attention to your new target customers’ supplier requirements. You’ll likely find quality requirements, among others, that need to be addressed operationally.
7-Go over financial planning and budgeting
Create a detailed financial plan and budget for your expansion, including projected revenues, costs, and cash flow. If needed, secure necessary funding or investments. Establish financial controls and reporting systems to monitor performance. Note that government programs may require additional reporting mechanisms and systems.
8-Hire new talent as required
Recruit and hire talent with the necessary skills and experience to support your expansion plans. Develop a training and support structure designed for the success of your new team.
9-Risk management and contingency planning
Identify potential risks and challenges associated with entering the new market. Develop contingency plans and mitigation strategies to address identified risks and minimize potential impacts on your business.
10-Establish timeline and milestones
Create a detailed timeline for your expansion, outlining key milestones and deliverables across all functional areas. Assign clear responsibilities and deadlines to team members, ensuring accountability and alignment with overall objectives. Remember to measure and review leading indicators for sales weekly. Regularly (every 30 and 90 days) review progress against your timeline and adjust based on market feedback and performance data.
Celebrate successes and learn from challenges, using these experiences to refine your expansion strategy and improve future performance.
Do you need help expanding into a new market? Let’s chat! You can email me at ghojan@jhaero.com or call my cell at 208-627-2565.
