How do you know when it’s the right time to expand? That’s the question on the minds of thousands of small business owners just like yourself that have put in the blood, sweat, and tears to watch their hopes and dreams become a reality. From the small, one-person operation your business started as, to the flourishing company with employees and growing sales figures, expansion can be a tricky road to navigate if you don’t know what to expect. In this article, we’re going to demystify business expansion and share with you some key steps and strategies you can employ to aid your efforts.
Before we dive into the thick of it, let’s address one very important question. Are you ready? The road to a successful business expansion starts with one very important consideration. Below are some of the key considerations with respect to expansion that will help paint a clear picture of where you and your business stand.
Your company should be exceeding or, at the very least, meeting the goals you set. We’re not just talking about sales goals, but business plan objectives and marketing targets as well. Then, you need to determine whether or not you’re operating to make a profit. If your business is only breaking even or generating very little profit, it’s best to hold off on expansion.
As silly as this question may sound, you need to really sit down and determine whether or not the new revenue can far outweigh the cost of growth. As your business grows, so will your operating expenses, and in order to be successful with expansion, profits need to be growing exponentially faster than costs.
Business expansion presents many new obstacles that you’ll need to overcome, which both you and your team need to be ready to face head-on and with confidence. Having a team that you know shares the same core values can make the expansion and onboarding of new staff much easier.
Any successful business expansion first starts with a detailed, actionable strategy. To cover the basics, consider incorporating the following methods into your plan.
Since you already know valuable information about your existing customer base and have a proven track record of generating business, obtaining more is an easy expansion goal. With a little research, you can employ similar strategies that may only need a few minor changes.
Expand your consumer profiles and target new groups within your market. Consider the ways your product or service can help other consumers and begin developing marketing strategies to target them, increasing your market share.
Additional Products or Services
Don’t try to be the jack of all trades, but a methodical expansion of your products and services is a great way to naturally increase the size of your target audience. Brainstorm new ideas and review your existing offerings to uncover supplementary opportunities.
Longer Customer Retention
It’s true, obtaining new customers costs more than keeping old ones. In fact, a mere 5% increase in customer retention can boost profits by as much as 95% (Source: HBR). Develop strategies that focus on retaining existing customers and getting them to make more purchases.
There are a lot of moving parts that come along with business expansion. To aid your efforts and help you stick to the timeline, it’s best to learn about and prepare for everything beforehand.
First and most importantly, expanding a business costs money. If you’re going to be in need of capital, consider options such as SBA financing, bank and credit union loans, or even industry-specific lenders that will better understand your business and expansion goals.
Do you have a product or technology that’s able to be licensed? Or maybe you have a business model that’s scalable through franchising. Whatever route you’re going to take, research all of the legalities so you’re well versed.
Do yourself a favor and make things as easy as possible by utilizing available services and technology that can aid you in the expansion process. Not only will this help you to stay on track, but it can also take some of the workload off of yourself and your team.
Just because you know your consumers in one market doesn’t mean you’ll be able to just copy and paste your tactics and strategies. Chances are, there will be key differences that require new approaches in order to generate the kind of revenue you’re projecting. Learn everything there is to know about your consumers just like you did when you first started the business and build marketing strategies that have the highest chances of being successful.
Inevitably, whether you’re moving to a new area or targeting a new niche within the market, you’re going to have competitors. Just as you’ve overcome competitors with your current business model, you need to conduct in-depth research to see what makes them tick. This is a new endeavor for you, new territory, and you’re competition knows the terrain. You need to learn everything about them to exploit advantages and build strategies around their weaknesses to gain the upper hand.
Venturing into new business territory is a daunting task, but a well-rounded marketing strategy is going to be the key to your expansion success. The data you’ve gathered from steps #3 and #4 will give you the groundwork for developing and implementing a range of tactics for social media, local SEO, PPC, and whatever other channels you can use for marketing to your new target audience. Whether incorporating it into your existing marketing strategy or running it separately, it needs to be consistent and data-driven.