Every successful small business reaches a point where thoughts of expansion, however modest, begin to form. If you’re looking to grow your business, there are a lot of options available, some offering more potential risks and benefits than others, but all require careful thought at every stage.
It’s worth bearing in mind that running a larger company will require additional time and commitment, at least initially, and your costs and management burden will increase alongside employee turnover. You’ll probably also need to consider fundraising to finance your expansion plans – whether from banks, VC’s or private investors – so there’s much to consider.
If you’re ready to go, there are several routes available for market expansion.
Choosing a new geographic location.
It could be your first thought, though it may not necessarily be the only, or best, option. It is likely to be less expensive and it could open your business up to new customers in a different area. You’ll need to do all the usual market research, business planning and number-crunching to make sure it’s a good move. If the figures stack up, it could be a good way of benefiting from new economies of scale and may transform existing operations into a more profitable business.
Set your sights on new market segments.
You don’t necessarily need to move to a new location to uncover untapped markets. Examine your existing customer profile and look at different ways to introduce your products and services to new customers with a similar profile. If your Internet presence is modest, you might be able to build sales by targeting new online customers or there could be international markets you can serve. You may have to make an investment – in web development or finding distributors abroad, for instance – but it could pay dividends in the long run.
Create a franchise business model.
Another tried-and-tested way of extending your reach is by franchising your business. If you don’t want the effort – or the risk – of taking your brand into new territory, you could still generate revenue and open up new markets by creating a franchise. You’ll need a business that lends itself to the formula, something that can be replicated in a variety of settings, as well as the advice of an experienced franchise lawyer.
By applying your business strengths and specialties to a complementary venture, you may be able to create opportunities for fresh growth. Often, the most successful diversification projects are those that leverage shared resources and expertise to attract new customers. If you run a plant nursery, there may be lots of extra business to be had from setting up a landscaping or garden maintenance service, for example.
Grow through acquisition.
It can be the perfect way to discover a new customer base, acquire new technologies and get the jump on the competition – all in one fell swoop. Buying a successful company will give you an increased turnover, more clout with suppliers and greater market penetration. But even if your target is struggling, you still might have the opportunity to get hold of additional resources, customers and staff for less than it might cost you to build it yourself.
This article has been edited and condensed.
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