Add-ons: Weigh the risks vs. the rewards

Risks vs. rewards

Analyze the impact on your business before adding services Before deciding to add additional services to your business portfolio, you must analyze the impact it will have on every aspect of your existing operation. Questions to consider:

Marketing

What is your current brand promise?
Will the new service enhance or distract from the customer's experience?
How will you communicate with your customers?
Will existing customers want to buy this service?
Can you attract new customers with the new offerings and then cross-sell existing services?
Does the new service complement existing services and can it be piggy-backed onto existing offerings?
How will this service be positioned in the market relative to your competitors?
What is the point of differentiation from your competitors?
Is the price that you must sell the service at to be profitable competitive in the marketplace?
Is the market large enough to support the growth you will require to make a return on your investment?
How will customer satisfaction be measured?

Operations

What equipment do you have on hand that can be used with the new service? Is this equipment already committed or at capacity?
What new equipment will you need to add to provide this service, both to increase capacity and specialty equipment that you may not already have?
Do employees know how to do this work? How will you train them?
Do you need to add employees to perform or manage the work? How will they be monitored? how will they be compensated and rewarded?
Do your current facilities have the capacity for added equipment and materials?
What is the work flow process?
How long will it take to complete the process?
How long is an acceptable back log or waiting period for the customer ? can you meet or beat the expected time frame?
What are the processes to gear up for the work?
What are the processes required to perform the actual work or service?
What processes will be required for follow up?
What impact does the new service have on the maintenance of your existing physical assets - be it equipment, facilities or otherwise?
Will the new service shorten the life cycle of existing equipment requiring more frequent replacement?
How will you handle the need for added capacity due to a surge in business - or will you turn away customers?
Finance & Accounting
What is the cost of marketing and sales activities?
What is the added equipment expense or investment?
How much will you pay employees?
What is the added administration cost?
Will financing be required?
What is the cash burn rate for the core and new service?
When will you need cash to support each service?
How much cash is on hand and how much will be needed?
What is the expected profit from this new service?
How does this relate to your other services?
Is this profit a significant enough reward relative to the risk?
What will your return on assets be?
How will customers pay for this service?
What are the invoicing and collections procedures?
Will additional or different insurance be required?

Administration

When asking and answering each of the questions regarding marketing, operations and finance, how will the administration of each be handled?
What current processes can be used to handle the new service offering?
What is unique about this offering that will require new or added processes to manage?
How will the information flow between interested parties?
What are the dashboard numbers you will use to gauge progress?
Where will the information come from and how will it be recorded?
What records must you keep to satisfy legal, accounting, marketing and operations needs?
Do you have the administrative capacity to handle contracts, invoicing, customer follow up and correspondence, record-keeping and reporting?

Organizational fit

Does the new service fit within the company core values, vision and mission?
Does it complement or distract from the current business?
Will adding this service help the company meet its short-term and long-term goals?