Twice in the past week I’ve seen business plans where the company targets for future years greatly exceed the size of the market. In one case, the company’s aspirations were 5 times larger than the market, but they had no plans to expand outside of their current market.

A wish ‘n hope outlook to targeting is fine for setting WAGs (Wild Ass Goals, if you had to ask) but if you plan to peg payments, commissions or bonuses to targets, they need to be both realistic and achievable. A stretch is fine, but charging every customer in the world five times for a single product seems hard to swallow.

This doesn’t mean that aggressive expansion needs to be limited to your current market. Some of the most exciting gains will be in expanding to adjacent markets or similar markets. Alternately, expanding your product & service portfolio within the existing market can also multiply the potential available, and allow you to leverage existing sector penetration & contacts.

These are interesting choices – adjacent markets allow you to capitalize on core abilities, usually with minor tweaks. Expansion within your existing market capitalizes on reputation, referrals and cross-selling. Choosing one of these paths should have some reliance on your current strengths – in the one case operationally, the other in selling.

Many companies attempt both of these simultaneously. You need a respectable critical mass to do this, and it isn’t generally recommended for mid-sized or owner managed companies, where multi-tasking and split focus will be a resource issue.

So where am I going with this? Know your market, and what you can achieve there. Can it hold your dreams? If not, look for ways to move laterally into greener pastures, while maintaining your current roots. Bushes do this well – spreading out as they run out of space. Trees don’t – they hit an obstacle and try to uproot it. Occasionally this can work, but more frequently….

 

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