January 28, 2021

Author: Charisse Conanan Johnson

Offering a new product or service can be a great way to drive profitability in your company—if you do it with intention.

• Take a look at the marketplace to see where your business fits and where you can innovate to bring in additional streams of revenue.         
• Identify your business' unique, competitive advantage and value proposition, and lead with it.
• Do a small beta test of your offering to get feedback on the product or service, as well as pricing.

Growing a business requires focusing incessantly on driving higher revenue and profitability. Without a desire for profitable growth, it will be difficult to lead effectively, mobilize your team, secure the appropriate resources and achieve the outcomes you want for your business.

Over the years of running my financial wellness platform Charisse Says, I have evolved my business model to create additional streams of revenue and higher profitability. In doing so, I have used three tested strategies that are applicable to any small business.

1. Determine the market opportunity, and innovate on your business.

Customers drive revenue. Therefore you must constantly evaluate what your customers want and need, and meet their demands with your products or services. Whether you administer surveys or gather market intelligence through a different medium, you must determine how much revenue your company can generate by meeting existing or new customer demand. If customer demand is coming from areas that you don't currently serve, then the market opportunity for your business is probably expansive.

In an interview on the podcast IdeaScale Nation, Edwin Goutier, VP of Innovation for the United Way, said, “Innovation isn’t about being the most creative person in the room. Innovation is about core understanding of the business, and of the environment around you.”When changing or new market dynamics present an opportunity to innovate, be prepared to pounce on the revenue opportunity. If you can answer “yes” to these three questions, you'll be prepared.

• Does the opportunity align with my capabilities and core strengths?
• Does the opportunity's benefits outweigh the costs?
• Do I have the appropriate resources (time, money and talent) to execute on a new product or service to meet customer demand?

2. Exploit your competitive advantage and value proposition.

It’s not good enough to develop new products and services. You need to have a distinct competitive advantage. Why do customers want your specific product or service relative to those of your competitors? Once you answer this question, you are one step closer to defining your competitive advantage.

Your product or service’s uniqueness creates a long-tailed customer value proposition. And, you should extract additional revenue from having a distinct value proposition. The determining factor for a successful value proposition is that customers are willing to pay a premium for the new product or service. (You may also be able to demonstrate value to different customer segment or geographic region, and thus generate revenue.)

3. Test new revenue streams before doing expansive launch.

Once you establish your competitive advantage and value proposition for your new product or service, test it out. There is no substitute for getting your new product or service in the hands of early customers.

Testing whether your new product or service meets customer needs, drives customer demand, and ultimately generates revenue is critically important. You will learn a lot about your business during a product or service testing phase. Then, you can apply your learnings to meet your short-term business goals while also preparing for long-term success.

Overall, small businesses that want to grow profitably should be intentional about how they do so. Make sure to keep a pulse on the market dynamics around you, lead with your value proposition within a new product or service and do a small test to demonstrate its feasibility and potential for success

Photo: Getty Images