Expansion or status quo?
Sunday, 14 Dec, 2009
0
TravelMole Guest Opinion by Jonathan Haseler, relationship director
Barclays Travel Team
Who in this environment is going to take a risk on looking to expand their business in the travel sector?
The answer is two-fold, those who have the foresight to begin with and those who are able to overcome the many obstacles to actually achieve this.
Many businesses over the last 12-18 months have been rightly focusing on their cost base as sales have dropped on average by 15% on prior year, and in many cases this has been vital to sustain the company.
In travel particularly this often translates as ‘headcount reduction’ i.e. redundancies. It can be all too easy to become inwardly focused and lost in the daily grind of trying to generate sales and run the business efficiently without looking too much at the bigger picture and what your competitors may be doing on a strategic level.
However, those businesses which are doing well are often the ones where thought is being given as to where the new markets are for growth.
This may be new countries or territories or simply looking at different products and additional revenue streams to those already in place. In many cases this is just positioning and trialling new ventures so that everything is set up as (and when) we start to fully emerge from this recession.
So this naturally leads on to how this move away from the status quo can be achieved?
Clearly there is no one right answer otherwise everyone would be doing it, however there are three main points for consideration.
Firstly, ensure that you complete your background research and fully understand the market dynamics. It is critical to know what your ‘new’ customers actually want and how they transact, which may be entirely different from the current customer base.
Second, do not necessarily jump in with both feet. If you adopt the ‘toe dipping’ principal and gradually feel your way then there is less on the line if the new proposition does not turn out as planned, and less risk to you.
Finally, keep your backers on board whether they be your bank or investors. Early engagement is always key and pulling together a business plan is vital to ensure that the case stacks up and the new venture will generate a suitable return.
Therefore, the closing question is whether you are planning strategically or simply tactically on a day to day basis. If you are not being strategic, your competitors might just be.
Phil Davies
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