How to expand your business? How can this be done?
Expansion of their business is a natural issue that arises before an entrepreneur as his firm develops. This is the natural stage of the life cycle of almost any company. Most of the world’s leading brands once started with a small shop, market tent, garage production (see article about businessmen who started in the garage).
If you are thinking about expanding your business, you need to understand that this entails certain risks: the expansion of the company will require more resources, time, effort. At the same time, as some businessmen say: businessmen have only two possibilities: either to develop or to perish. And this statement is not far from the truth, because competitors do not doze.
The extension has the following advantages.
- Better location. Location is important not only in business on real estate. Perhaps by opening a new office or shop in your own or someone else’s area you will find that it is more popular among buyers.
- More audience. When you begin to expand your company, you will enter new groups of consumers, which may be larger in number than the old segments of customers.
- New employees – new ideas. To expand the business (especially to other cities and regions), it is often necessary to hire new people. It is possible that you will find talented professionals who will bring new ideas to your business.
- More funding. Financial support for the growth of the company can not only cause you a nightmare, but also open up new opportunities. If you often go to banks for a loan for business, then the fact that expansion can be an additional argument for bankers, as it indicates financial stability and development of the enterprise.
What are the ways to expand the business?
# 1 Open the office, shop elsewhere.
The new location is not the best way to expand the company, – so, at least, many small business owners claim. However, if you intend to build a chain of stores, you should understand that by and large you put all your eggs in one basket (you are targeting one industry and one type of consumer). Remember the following:
- Make sure that your business shows steady growth over the past few years or quarters
- Make a business plan for opening a new store, office
- Determine, due to what will be financed the expansion of business
- Choose a location that will be best for your business, not a purse (do not forget about the mean guy who pays twice)
# 2 Using a frachnachining scheme.
The essence of franchising is to provide ready-made technology to other entrepreneurs and receive from them a percentage (royalties) or a one-time payment (a lump-sum contribution) for the right to use such a “turn-key business”. Companies such as McDonalds, Subway, Holiday Inn have expanded their business on this principle.
If you are looking for an option to expand a business without attachments, then this is definitely not the right way. Franchising will require careful legal preparation and support of transactions, which will result in costs.
# 3 Licensing your brand.
If you paid much attention to the promotion of your business and the name of the company, then consumers should have started to form what marketers call awareness of the brand. When such intangible capital accumulates, it can be commercialized over time by selling a license for its name (trademark) – that is, the right to use your brand to other companies.
For example, you have a popular fitness center. You can invite the local T-shirt manufacturer to use the logo of your establishment. Or you have a well-developed early childhood development center. Then you can offer the local stationery to print school notebooks using your company’s logo.
I hope you got the point: in order to attract a buyer of a license, your brand should be something of itself, that is, to have a certain weight and place in the minds of consumers.
# 4 Formation of a strategic alliance.
Strategic partnership in entrepreneurship can be a very effective and powerful way to rapidly expand the business. Combining the resources of two firms can not only increase the profits of each in comparison, if each acted alone, but also increase the chances of surviving in a competitive struggle. When the “big dinosaurs of the industry” come to the heels of your firm, the strategic alliance is one of the options to confront a larger player.
The only thing you need to remember: each of the parties must understand their commercial benefits and be interested in such a partnership.
# 5 Diversification.
What does this mean? Suppose your business was in the production of metal products. And then – bang! – You suddenly decided to open a jewelry store. I hope this example makes it clear that this is a very dangerous strategy for expanding business? The matter is that in business circles and circles of theorists of strategic management disputes and reasonings such as diversification – evil or good are constantly being kept.
Our position in this regard is simple: if you do not have enough money, do not climb where you are not asked. You need to diversify into those industries where you understand something. Otherwise, the risk is simply to lower money.
# 6 Entering new markets.
Expand business in other regions is the first thing that comes to mind when the local (local) market is already saturated with your products (and perhaps spits from oversaturation). In this case, really, it’s time to try your hand at other markets.
Here I would like to make such a reservation: there is always a great temptation to enter the markets of neighboring regions (regions) of your country. It seems to be understandable. But who told you that your product is in demand there, or will you compete there? We recommend that you first carefully study the markets of neighboring areas. It may turn out to be that an area that is slightly farther than the neighboring ones will be attractive and more profitable.
# 7 Buying another business.
To expand your business and add a headache, you do not need to manipulate your company. You can just buy another company and develop it at your own discretion. Earlier we already published an article on how to buy a ready-made business and not burn out.
# 8 Expansion of business in the Internet.
One day Bill Gates said that “by the end of 2002 there will be only two types of companies: those that are on the Internet, and those who do not have any business at all.” Perhaps he slightly exaggerated, but today, virtually every company seeks to have its data, contacts, description of goods and services on the network, and that it could be found by potential customers and customers.
When you think about expanding your business, then remember that the key to success lies in two components: financial stability (even if your idea fails, enough money should be enough to keep the business running) and competence (that is, knowledge of the area , which you are going to master). Good luck in expanding your company!
Image credit: geralt