Marcia Bagnall, SBDC Director
Are you looking for ways to reach new customers and new markets? A thriving business needs new directions, is it time for you to find your next move? What you need to keep in mind is that expanding involves choosing methods that capitalize on your company’s strengths, fit your company’s product or service, and address the concerns of limited resources, cash and credit.
Before you put together expansion plans, ask yourself what additional resources you may have to lay in first. Do your employees have the necessary skills to support a growth strategy, and will you need to hire additional staff? When you get additional business will your operations be able to handle it, and will you be able to maintain service levels? Does everything already run smoothly (management, customer service, inventory controls, bookkeeping) and will those systems be prepared to cope with increased load? What will this do to your cash flow?
If you’ve got the home bases covered then here are some classic ways to expand your business:
- Take an existing product or service to a new market. Test out this market first in a small way, and then if results are positive, go for it. You are probably already overlooking market segments that are right in your backyard.
- Expand your line of existing products or services to include new ones. The smart solution is finding new ones that complement and support the older ones. You know that your existing customers like your current offerings, so give them something new to work with.
- License your product or intellectual property to another business. This strategy involves expanding your reach while allowing someone else to take on the production, distribution and marketing. You give up a lot of the work and risk and in exchange for giving up some of the profits. It can be a good trade. You will need to make sure your intellectual property is protected first. And check to be sure your licensing partner has a positive reputation with potential customer bases and glowing references in your industry.
- Expand to a second location (or third, etc.). This is the chain strategy and it works for a business that is easily reproduced. But be careful to analyze whether your success is tied to your location or your staff at your current location. Could you create your success again somewhere new?
- Consider franchising your business. This takes the chain idea to a whole new level. If you can replicate your business multiple times and turn it over to others to run, this may work for you. You’ll need to make sure there’s a strong market for your product or service first and that you have sufficient capital to make this work. And of course you’ll need to have systems in place (in writing) that can be taught to others and implemented consistently.
- Merge with another company or buy another company. This can expand your customer base, give you access to intellectual property, trained employees and capital, and create operating efficiencies. Clearly you will need to make sure the two companies are a good fit first.
- Consider taking your product or service to a global market. There is a world of potential customers out there. But again, start small and move slowly. You’ll need to factor in cultural and language considerations in your decisions too, so make sure you have adequate assistance before proceeding.