Over the years, existing businesses have ventured into new markets and succeeded. Unfortunately, it’s not the same for others. The difference may be the foundation for research, marketing, and funding. Last year, 55% of businesses expanded into new markets, launched them and made it into the news. The discussion below may be helpful if you plan to do something similar.

 

Test the market first

 

Entering a new market is like starting a business for the first time. However, this time, the defining element is expanding your reach. Having gained experience as an entrepreneur, there is always the draw to try out other markets to see if it would be successful. Indeed, you will not be the first nor the last to consider this. Companies like Red Bull started as an energy drink. However, after solidifying their brand, they entered a new market – the media.

As a media company, they focused on movies, music, TV shows, etc. Their hold on the entertainment side of media blends in very well with their popularity as a refreshing drink. Another example is the car company Tesla, which has entered the energy storage market. In testing the market, all these successful companies took years to do their groundwork. After conceiving the idea, they knew that testing the market would determine whether to go ahead. It is worth noting that testing the market can be capital-intensive. Although it is a pilot phase, you need funding to support all the public activities that come with it. Other elements worth considering are stability and security during the testing stage. Energy expert Hussain al Nowais says these two must always be part of the checklist.

 

Be certain about the future of the new business market

 

If your company is following trends and is basing its new market entry on that alone, the risk of failure can be high. This is because trends are transient and fail to take a lasting hold on the market. It is important to consider the prospects of your new market and how it can be sustained ten years from when you entered. Some business areas, like the energy sector, seem to offer more advantages. The most plausible reason is the huge global demand for energy and the fact that the world is turning to renewable sources. The endless possibilities make this market promising for the next several decades.

 

Consider the competition and how you will fare

 

Sometimes, even when prospects look good, there is still the risk of failure. This is largely due to tough competition existing in the sector. It would be best to understand that competitors with years of advantage may have the upper hand. Therefore, this raises the question – what can you do or offer differently to give competitors a good run for their money? Bigger companies have even failed to stiffer competition, so what is your strategy? You may have heard about how the British company, Tesco, failed in the US when they couldn’t face the competition presented by American grocery chains. Using this as an example, you can appreciate the months of hard and smart work that go into breaking into a new market.