Entering new markets
Feb 22, 2010
Many A/E/P and environmental firms are planning on entering new markets this year. The reasons for doing so are pretty obvious— first among them being that so many markets firms are already in are down. That said, you can easily blow entry to a new market. What you are doing in an attempt to help your firm may end up costing you dearly just when you can least afford it. A “market” for the purposes of this discussion can be defined as either a geographic area or a group of clients with common wants and needs, or some combination of the two. Here are some of my thoughts on how to increase your probability of success in entering a new market. Do some research. Don’t just follow your gut on what market to go into. Find out how large it is, how many competitors there are in it, and what clients are dissatisfied with as it relates to their current providers. Hire someone who has worked in a client organization (they aren’t all “companies”) that you would like to serve in that market. There is no substitute for insider knowledge of a client organization if you want to successfully work with them. This tactic can backfire, however, if you don’t hire the right person from the client organization— you don’t want to end up with someone they think poorly of or were glad to be rid of! Hire someone who has worked for a similar firm to yours serving that market. This individual should have valuable insights and connections that can help you enter the market with some credibility. Overfund your marketing and P.R. efforts. Think about it— if the typical marketing budget for an established provider to a particular market is “X” percent, why would you be able to make inroads in that market with anything less than “2X” percent? It makes no sense at all! You will have to beat your drum louder than those who are already there. Become a part of the market. Immerse yourself in its culture. Go where they go. Socialize with them. Join their clubs. Read their publications. Make their cause your cause. Have a fallback plan. Set some clear goals, have a budget for what you’ll spend, and a timeframe for pulling the plug if your efforts don’t pay off. You want to be sure that you don’t waste any more than you plan to just because you have a sunk cost. As financial people like to say, “a sunk cost is a sunk cost!” Originally published 2/22/2010
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