Growth and expansion are key goals for most business owners and entrepreneurs. But how can you expand your business in today’s lackluster and slow-growth economy?
Here are six small business expansion strategies that may help you grow your business to the next level:
1. Add new products and services to your mix. This strategy sounds relatively simple, but executing it well can be challenging. For starters, you need to figure out which products and services your customers want, and how much they’ll be willing to pay for them. Next, determine whether or not you can sell these products and services at a profit.
The best way to accomplish this is to conduct thorough market research before committing any resources (financial and human) to new product or service expansion. Ask your current customers what they think about your new product and service ideas, including potential price points. Your market research needs to focus on customer demand for new products and services and your cost to manufacture, deliver, and sell them.
2. Sell more products and services to your existing customers. This is the flip side of the first strategy: Penetrating deeper into your current customer base. Start by performing a market segmentation analysis to identify the customer segments that are more likely to buy so you can focus your sales and marketing efforts on these segments.
This analysis will divide your customers into segments based on the criteria you choose (age, gender, location, buying history, etc.) so you can analyze their potential profitability when it comes to selling them new products and services. Armed with this information, you can better allocate your sales and marketing dollars.
3. Expand into new territories. The idea here is to market and sell your existing products and services to new customers. These new customers can be in different segments or niches or different locations from where you currently operate.
If yours is a retail or storefront business, this type of expansion will likely involve opening new locations in different geographic areas — whether across town or across the country. Doing so will require a significant investment of both time and money, so perform thorough market research first to make sure there is enough customer demand in the new territory to justify the expansion.
“When you are thinking about expanding into new areas, the first thing you need to do is to determine how to specialize your advertising for your new market,” advises Tri Nguyen, founder and CEO of Network Capital Funding Corporation. “If you can’t convey the benefits of your product or service to residents of a new region, you’re going to struggle to make it. Be honest about flaws and strengths as you consider the message you will be conveying to a new area.”
4. Target new customer markets. Most businesses target their sales and marketing efforts to specific customer markets based on demographics like age, gender, and location or psychographics like interests, activities, and values. But are there other customer markets that might also be viable for your products and services?
“Being able to reach the right target customers through the right mediums, at the right time, is the first step to expanding your business into new customer markets,” says Network Capital’s Nguyen. “When expanding into new target markets, you need to ramp up your advertising to these markets. This is pretty intuitive, but it’s true.”
5. Tap into new sales and delivery channels. The Internet is the best example of how a new sales and delivery channel can transform a small business. Countless companies have reinvented themselves to take advantage of online opportunities — from brick-and-mortar retailers opening online stores to service providers who are able to reach a much broader audience by advertising online and using search engine optimization (SEO) techniques to rank highly in Web searches conducted by the prospective customers.
6. Acquire another business. This may be the fastest route to growth and expansion. Merging with or acquiring another business can literally double the size of your business overnight, growing your sales and revenue exponentially. But you must perform thorough due diligence on any potential acquisition candidates before moving forward with a business merger.
In particular, your due diligence efforts should focus on the company’s financial condition, the strength and depth of its management team, the breadth of its client base, and the soundness of existing contracts. When considering companies to possibly acquire, look for synergies between the two businesses that will result in the combined entity being stronger than either of the individual businesses would be standing on their own.
The condition of the economy doesn’t have to dictate your business growth and expansion plans. Consider how you can implement one or more of these strategies to put your company on the fast track to expansion today.