To find new sources of growth, business experts recommend that companies of all types address issues that surround their products, rather than focusing on improving products incrementally. Thus, schools should focus first on “adjacencies” such as products, services, geographies, or customer segments that are closely related to their core business. This approach can help them generate new revenue while risking little.
Experts also state that a key principle of successful business growth is that it should not add to, nor detract from, the core business. Organizations that want to grow are advised not to stray too far from the core business, since this increases the risk of failure.
Initial Steps When Launching a New Revenue Program
Although for many organizations the need to create alternative sources of income is evident, the best approaches to take in evaluating, marketing, and administering new revenue programs are less obvious. Experts in this area offer the following guidelines when launching or improving a new income program:1- Conduct market research. It is important to ascertain up front what the true demand is and what the responsiveness of the possible customers will be. In some circumstances, consultants recommend introducing a pilot or trial program.
- Watch emerging trends closely. When conducting research, organizations need to identify the most critical areas of need-to-know information, as well as customers’ unmet needs.
- Review your offerings. Creating a complete list of all available revenue programs may help school officials see the big picture before making a decision to introduce new programs.
- Develop a business plan that includes adequate staffing. If programs are successful, staffing may need to be increased to maintain the level of service and attention given to all constituents.
- Pick the fruit on the lower branches first. When launching new revenue programs, select the easiest initiatives first.
- Evaluate your tolerance for risk. Since there is always a risk of failure, school officials should be prepared for this possibility.
- Examine your return on investment. The goal is to invest as little money as possible to obtain as much money as possible. For instance, sponsorship programs can get a 100 percent return on the extra effort, since there are no direct costs associated with generating the additional income.
- Consider spinoffs. Schools can begin with products or services that are currently offered and are popular among their existing customers. Keep in mind that a spinoff should meet a legitimate need, should be convenient and cost-effective, and should fit into the strategic mission of the school.
- Catch the competition. To remain competitive, schools need to leverage their unique assets and differentiate themselves in the marketplace.
- Be patient and avoid the quick fix. Developing profitable programs is not an easy task. Experts say that programs often take about three years to operate in the black.
Notes
- Alessandro Buffoni, Alice de Angelis, Volker Grüntges, and Alex Krieg, “How to Make Sure Your Next Product or Service Launch Drives Growth,” McKinsey & Company: Marketing & Sales, October 2017; online at https://www. mckinsey.com/business-functions/marketing-and-sales/our-insights/how-to-make-sure-your-next-product-or- service-launch-drives-growth; Jeff Pruitt, “How To Build a New Revenue Stream Without Killing Your Existing Business,” Inc., May 23, 2018; online at https://www.inc.com/jeff-pruitt/how-to-build-a-new-revenue-stream- without-killing-your-existing-business.html; George Hojeige, “Why Diversifying Business Revenue Streams Is Crucial to Your Success (And How to Do It), Entrepreneur, January 8, 2019; online at https://www.entrepreneur. com/article/325941; Alison Coleman, “A Diversity of Ways to Diversify Your Business,” Forbes, April 23, 2017; online at https://www.forbes.com/sites/alisoncoleman/2017/04/23/a-diversity-of-ways-to-diversify-your- business/#6ee8ea67cf91.