Has the time come for you to think about expanding your business? Maybe your business is doing very well, but you are ready for a new challenge. Possibly, you need to consider expansion in order to remain competitive in your industry.
Expanding a business can be the most challenging stage in a small business. Why?
- Your business needs to have “expansion capital” – money dedicated primarily to hiring additional staff, marketing campaigns, and/or to open additional geographic locations
- The owner of the company or top management may find it difficult to focus on business as usual during expansion
- Your business may need to completely update the technological systems used to keep track of sales, inventory, and accounting
You will find the following four expansion strategies useful in planning your business growth:
1. Grow sales This is the most obvious strategy – but not always the easiest. In order to grow your sales, you have to make sure that you have the infrastructure in place within your company that can withstand the pressure of increasing sales.
- Develop a sales process and make sure that your staff is knowledgeable on how to use it.
- If you are not using a Customer Relationship Management (CRM) system, now might be time to implement one.
- Take a look at your cost structure. If you are planning to see a big increase in sales, this might be an opportunity to negotiate lower prices with your suppliers. Also, is your product priced correctly? Don’t undervalue your products or services.
2. Expand menu of products or services This strategy can work really well for some companies. In fact, there may be additional products or services that your customers would actually already want to buy from your company.
- What do your customers want? What kind of changes are occurring in your market?
- Examine the services that you can begin to provide that are related to the products that you already offer.
- What kind of add-ons can you provide? An example would be a service plan for a product that you already sell.
3. Move into another geographical area This could mean selling online in another part of the world, opening up another office, or even franchising your business.
- The lowest cost way to do this would be to offer your product or service via the internet – with some creativity, you may be surprised by the results.
- If you are considering a new location, be sure that you know the local challenges, do market research, and understand local staffing costs.
- Franchising is not for the weak of heart – this may have heavy initial costs, but if you are a good, organized manager and you have the right type of business, it may work very well for your company.
4. Acquisition This is a great strategy for moving into a new area or gaining market share. Many companies have expanded their product offering or have moved into new areas by buying their smaller competitors.
- Thoroughly analyze the company’s accounting records. Spend the money to hire an auditor to help you with this.
- Understand the company’s existing obligations to suppliers and customers
- Take a look at the business’s “culture”. Will it be a good fit with your business or will it be a challenge to integrate?
These strategies can be combined to design the best plan to move your business forward. Happy growing!
Editor’s Note: This is a Guest Post from Naomi Tapia, owner and primary contributor to the content of SerialStartUps.com, a wonderful resource for small businesses and entrepreneurs. To learn more about Ms. Tapia click here and be sure to follow her on Twitter at @naomitapia, LinkedIn: naomibrons, and like Serial Startups on Facebook.