Core expansion is far different than extension. Extension is often referred to as franchising, licensing, line extension, or branching out — also known as conglomerating. In this context, I am referring to expansion by division.
If you're a specialist in your field — which I hope you are after reading this book — and you offer only one type of service, you can expand from within by dividing your core (your product or service) into multiple, smaller components.
This helps to do 3 things. 1) It doesn't take away from your category or specialization. 2) It increases your hit ratio when targeting clients, since some of them might be interested in your entire package while others may be interested in only a portion of it. And 3) it increases the aura of expertise you project because you refrain from spreading yourself too thin.
McDonald's are reputed worldwide for their hamburgers, pure and simple. Ray Kroc was a milkshake machine salesman and his clients were mainly fast-food restaurants. One day in the mid 1950's, Ray stumbled onto the little drive-in restaurant in the American Midwest run by a couple of brothers who were cooking hamburgers in a different way: the assembly-line method.
He had an idea and the result became the joint venture with the McDonald brothers that today has literally revolutionized the entire fast-food industry.
In the beginning, McDonald's had no more than three simple items on their menu: hamburgers, fries, and shakes. Up to this day and hopefully in the future, you will never find a hot dog at a McDonald's. But now they have hamburgers in almost every food category possible.
They offer hamburgers, cheeseburgers, chicken burgers, fish burgers, double burgers, rib burgers, and on and on. They have small fries, medium fries, large fries, and super-size fries. That's the power of core expansion.
Nevertheless, how does this apply to you? Let's say you are a programmer and you offer consulting work. For instance, you may provide consulting, research, programming, implementation, testing, hardware installation, training, customization, upgrades, licensing — and the list can go on and on.
Obviously, all of these elements may probably be part of one global package that relates to an area in which you are specialized. But by dividing your core product into individual components, you may not have expanded in a direct sense but you have, however, expanded your possibilities.
Similarly, you may offer an entire package right now but fail to recognize its many different components — parts that can be individualized and offered separately. Look at what you currently offer. Take a notepad and write down every little component that's a part-and-parcel of what you offer. Then see if each part can be marketed, sold and serviced separately and individually.
Once done, put names on each “division,” and include them in your collateral materials. Using the previous example, you could develop your own research division, development division, implementation division, training division, etc.
The word “division” means exactly what it says. And by doing so, you may stumble onto clients who may need the entire package and others who may only need a part of it — like, for example, a training specialist.
Keep in mind that you shouldn't digress from your specialization, but try to remain within your core and expand from within. Of course, while you may have narrowed your niche, through division the demand for your products or services will likely increase, even with prospects outside of your target market since you are now catering to different market segments.
You can also add new products or services to your portfolio that cater to your niche. Look at dry-cleaners: beyond dry-cleaning, they also offer tie cleaning, shoe repair, tailoring, winter clothing storage, and so on and so forth.
If you do expand in such a way, don't just leave it at that. Put names on your divisions that specifically describe each one. Like I mentioned in the first commandment, give each division a special brand or suggestive name.
Plus, aside from dividing from within (i.e., your product or business), you could also do it the other way around by dividing your clientele into groups. While they may still be part of your niche, you have classified them into different categories, which will increase your hit ratio.
In my long-term consulting business, I make a distinction between three types of clients who might need my services. For instance, there are those who are low-key and only seek to increase their cashflow. There are also middle-of-the-road clients who want to possibly expand in staff, size or scope. And then there are entrepreneurial types who want the whole “ball of wax”!
What's the benefit in doing this? A conservative client in need for some marketing assistance, but fears that he or she will go overboard in doing so (or is low-key, such as a doctor or lawyer), may be attracted to the fact that my services also cater to his or her specific needs as well.
And finally, let's say that your package is inseparable. In this case, there is still a portion that can be expanded by setting up strategic alliances with other specialists (I will deal further on this in Commandment #10).
For example, you're a wedding planner offering a package for helping couples prepare for the most important day of their lives. However, when it comes to stationery such as wedding invitations and reply cards, you use a local printer with whom you've set up some kind of strategic alliance.
This local printer gives a special price break offered exclusively to your specific clients as a way to create more business. And, more than likely, the printer is glad to help since he or she knows that by doing so you will constantly send that specific printer more clients. It's win-win.
You can call it your “Incredible Invitation Incentive,” which includes the planning and printing of wedding invitations. (Also, the design, mailing and response management of those invitations could also involve the co-services of a graphic designer, mailing house as well as the printer.) You see, you are not competing with the printer but both of you are seeking a same market.
That's it for now. Ultimately, remember that by dividing your core you will paradoxically multiply your chances of getting more business. Each one of your “divisions” can cater to its own individual niche. If you own and operate multiple niches, when added up they can become very profitable for you.