The guide to expanding your business services internally vs. with a partner.


Are you contemplating expanding your service lines to grow your business?

Deciding between introducing a new service line or partnering with an expert that already offers the service is an important decision for any business looking to scale.

Making the right or wrong decision will significantly affect your organization’s growth trajectory and performance.

That’s why successful business expansion requires careful thought processes and strategic execution.

This post will provide you with a clear framework for reviewing business opportunities so that you can make the right decision!

Questions to Ask When Considering Service Line Expansion

Before jumping into any new service line expansion or partnership, you need to make sure the idea is even worth pursuing in the first place.

Asking yourself the right set of questions will help flush out if it’s a good idea and will help reveal the right path to pursuing the opportunity.

Here are the questions we always start with when considering service expansion:

  1. Does this service solve a real problem for our current clients, or is it just a ‘nice to have’ feature?  Because you don’t wanna end up like BlockBuster, right?
  2. Does this service complement/enhance our core offering in any way?
  3. Do we have expert-level experience with the service?
  4. Does the service align with our existing hiring, training, and employee processes?
  5. Could this service line function as an entirely separate business entity?
  6. How would adding this service affect time management across our organization?
    • Would it cause disruption to our core services?
  7. Can we test this service on a small scale before investing heavily in it?
  8. What would the initial costs be to start offering this service?
    • Can our business afford it?
  9. Are competitors offering this service? 
    • If so, how can we deliver it better, more uniquely, or cheaper?
  10. Do we have clients right now who would be interested in this service?
  11. Will offering this service help us to attract more clients?
  12. Would it be more effective to provide the service through a partnership agreement?
  13. Does this new service align with our brand and the image we want to portray?

Answering these questions can provide a clear perspective and help businesses avoid common pitfalls, such as diluting brand value or overstretching resources.

The Importance of Capitalizing on Existing Business Expertise

A core principle to business growth is focusing on expanding in areas where your business already has significant experience and established processes.

Your business’s existing team, processes, workflows, recruiting, and training programs are priceless commodities that you should be taking advantage of during expansion.

Consider this example: You own a software development company that has excelled in desktop & mobile app development for years in the health & wellness industry.  A strategic decision might be to expand into parallel industries such as Gyms/Fitness to take advantage of your existing teams, processes, and experience.”

On the other hand, adding services that your team lacks experience with will cause considerable strain on resources.

For instance, if the same software company all of a sudden decided to offer marketing services, it would require significant time and investment to gain expertise and establish processes required to deliver services.  This diversion would likely result in quality and performance issues in both the core & new services.

Capitalizing on your existing experience, team, and processes not only streamlines the buildout of the service line but significantly reduces the operational & resource strain of expanding your business.

However, we aren’t always able to expand in areas where we are already experts.  In these situations, we have to do everything possible to avoid potential pitfalls.

The Pitfalls of Diversifying into Unknown Territories

Introducing new services should not come at the cost of your business’s core service.

Building out new service offerings in areas where you lack experience will require a lot of time and resources to gain the required knowledge before you even begin creating new processes, hiring, or training your team to consistently deliver the service.

One of the most common but hard to identify issues caused by expanding into unknown territories is the effect it has on existing service level quality and client experience.  But these issues don’t always reveal themselves right away.

For instance, it might take months for the drop in service quality to begin adversely affecting client satisfaction and retention, leading to a ripple effect of diminished reputation and returns.

Therefore, when you consider expanding services into an unfamiliar area, partnering with an industry expert often becomes the most effective strategy.

Partnering as a Viable Alternative for Expansion

When considering service expansion, one if not the best alternatives is to enter into a partnership with a business that is already an expert in providing the services.

By doing this, you get to leverage the partner’s established processes and team to skip the learning curve, conserve your resources and increase service quality for your customers.

Consider the case of a boutique hotel deciding whether or not to offer luxury yacht experiences to its guests.  Rather than diving headfirst into the boating industry, an area they most likely know very little about, a smart move would be to partner with an established boating provider. By going this route, the hotel achieves its goal of adding an exclusive service to its offerings and ensures the boating experience its guests have aligns with the quality and service standards the hotel guests expect.

However, unfortunately, as good as it all sounds, successful partnerships are not a given.  they require careful evaluation and planning and a mutual understanding of roles and expectations.

Ask yourself these questions when considering business partnerships:

  • Does the potential partner have a proven track record of success in the service area? You want to partner with an expert with the service.
  • Do their values and company culture align with yours?  Alignment with values & culture will help with collaboration and consistent service delivery.
  • How are their reputation and customer satisfaction?  Look for partners with a strong reputation and high customer satisfaction scores. Their public perception will inevitably impact your own brand.
  • Is there a clear understanding of roles, responsibilities, and financial arrangements? Both parties need to have a clear understanding of who is responsible for what, how profits or revenue will be shared, and how conflicts will be resolved.
  • Start by identifying if the

Asking these questions will help you gather the information necessary to evaluate potential partnerships.

Studying the Competition

Part of deciding whether or not to focus on a potential service offering is studying the competition.

And an annoyingly large amount of you skip or avoid this process!

Knowing if and how competitors offer similar services can provide insights into market expectations, pricing, and potential ways to differentiate yourself.

Moreover, a competitor analysis is also one of the fastest ways to validate if an idea is even worth exploring further.

Conclusion: Internal Service Expansion & Partnership

When considering service line expansion or partnership, you must proceed with a well-thought-out plan, conduct an in-depth analysis, and capitalize on your strengths.

The balance between expanding your business’s horizons and preserving its core competence will pave the way for your sustainable growth and success.

AND ALWAYS REMEMBER: The goal is to offer value to your customers while ensuring the long-term success of your business!!