When you first started your business, you may have had the dream to make it big one day. You might have noticed increased customers, greater profits and higher market value. Maybe it is time to make this dream come true.
In this article, we will discuss the ways to expand your business and the points that you should consider before doing so.
When you plan to expand your business, you might consider opening at other convenient locations, introducing a new product or service, increasing your team, etc.
Here are some of the common expansion strategies for your consideration.
Market penetration strategy
Market penetration strategy involves increasing market share by selling the same products in the same existing market, for instance, by lowering the price.
Market expansion strategy
With a market expansion strategy, you will be selling your current products in a new market.
Product expansion strategy
Under this type of strategy, you add features to your existing products or expand the product line while still selling in the same market.
Growth diversification strategy
In this type of strategy, a company sets out to sell new products to a new market. As a small company, this can be a risky strategy and needs careful market study to ensure if your new product will be liked and accepted by the new customers or not.
Acquisition of other companies
An acquisition strategy means you purchase another company to expand your operating circle. This type of strategy can help to boost your product line and enter a new market.
Regardless of your choice of expansion, below are a few important areas that you must consider before the expansion.
- Do your due diligence.
Before you rush into any expansion decision or action, you need to examine all the options available first. Gather information as much as possible about the options you are considering. Try to figure out the possible reasons you could fail and ensure that you are backed well in those aspects.
- Be sure you know your numbers.
Business expansion always involves investment. When you invest funds toward the development, such as equipment, production, new staff, etc., make sure you have your cash flow sorted. You must have enough funds for these investments and also plan when and how you can bring in your return on investments.
It is advisable not to consider business expansions before clearing out your debt. By piling on debt, you will not be able to make the best of your expansions. Consider settling your debt first, with options like a debt management program, credit card settlement process, etc.
- Ensure you are not losing on quality.
While expanding business, it is necessary to remember that customers are directly responsible for a company’s growth. While growth will be challenging, it is crucial to keep in mind not to compromise quality. You must make it your priority to maintain the same standards of quality that customers are used to. You must focus on analyzing every context and maintaining their standards.
- Focus on innovation.
When you plan to expand your business, think of ways you can bring in creative innovations. Many opportunities and scopes exist to modify a current model or create newer and better versions, which is crucial for growth in any new business model.
- Consider team expansion options.
With ideas of expanding your business, you might also be thinking of expanding your team or hiring new employees. This can be challenging, and reckless hiring can result in a damaged reputation and contribute to why your new business could fail.
To avoid this situation, you can observe the talent and skills of your existing employees and expand your team with employees having a similar set of skills.
- Understand organizational limits.
When planning your business expansion, you need to consider your organizational limit. Like any other organization, yours, too, has a limit. Development, the introduction of new products or services, and growth are necessary for innovation, motivation, customer satisfaction, and profit maximization.
However, you should remember not to overdo it. Overlooking and stressing your corporate limits can be a reason for failure.
- Double down on strengths.
Study your strengths and weaknesses from every aspect. For instance, focus on your strengths as a leader. What are the strengths of your team? What is the market type?
With these understandings, figure out ways to maximize these strengths. This can help to ensure a sustained profit margin.
- Follow the same recipe.
Expansion is a prominent sign of growth and success in your business. Take some time to figure out the factors that led to the success of your business. Make it a point that they are followed in every expansion step. Stick to this old recipe and use it as your new venture’s core principles.
- Leverage your customer base.
One of the most helpful ways to ensure growth in your new expansion is by leveling up your customer base. After all, customer satisfaction is the key factor to business growth. They know your brand and expertise. Investigate what the areas of unmet expectations in your existing customers are. With this, you can understand what new introductions can be incorporated with the expansion to level up your customer base.
- Consider your risk-taking capabilities.
Before expanding your business, another vital point to keep in mind is your risk-taking capabilities. You must ask yourself the following questions: Are you risking your current customer base with the expansion? Do you have enough funds to back up in case of a loss related to expansion?
It is advisable to assess these questions and go ahead with the expansion ideas if you are positive.
While “think bigger to achieve bigger” is a great motto, it is not quite that simple to expand your business, and it is about more customers, employees, location and, of course, money.
When expanding your business, you need to remember that you have a considerable investment, which requires a lot of cash. While the idea of a loan or debt may be convenient at first, in the long run, it may be challenging. You can consider options like credit card settlement to help break the debt cycle.
Take a while to get on solid grounds, and then carry out your business expansion plans. This way, you can clear out your debt systematically and be ready to grab the right opportunity and make your dream true in due time.