Guest Post by Alexandra
Growth is a central tenet of business. Being able to continue on an upwards trajectory means being able to develop and expand healthily, rather than stagnate or falter. But for start-ups, it can hard to find ways to move forward. So what are the best ways to expand a business without having to invest a fortune, and how do they apply to yours?
Here are five of the most common ways of expanding a business.
1. Target new markets…
Consider actively targeting new markets with your existing products. This means isolating a potential set of customers with whom your business currently has no contact and developing a strategy to convert the potential into actual.
A different market could be a whole new age bracket, or it could simply be another part of an industry you’re already targeting. There’s no need for this to cost you a lot; a bit of basic marketplace analysis and a few potential consumer surveys should quickly point you in the direction of the best new area to target.
The speed with which you can make these changes might depend on how far you can stretch existing products, but if they’re all spread as effectively as they can be across the marketplace, you need to innovate.
2. …with fresh products
Being able to move nimbly around the marketplace will strengthen your business, and with the right research, you’ll know how and when to innovate. Diversification plays a large part in this point and is an extremely effective strategy for business growth.
You don’t need to develop a whole new product from the ground up. Existing items and services can be tuned to fit new markets, or simply redeveloped to suit new needs in your existing customer base. Again, a bit of simple market research can quickly highlight new products that your customers would be interested in
3. Expand into new locations
Physically extending your influence can reap huge rewards. While it isn’t necessarily the best option for all businesses, it’s a popular choice and tends to be what business owners think of when they hear the word ‘expansion’. Opening a new shop or establishing facilities in a new country are tangible examples of business growth.
Whether or not opening a new location is appropriate for your business will depend on how well it has performed within its current market. A long track history of uninterrupted growth, a robust management system and plenty of capital are all prerequisites for this sort of expansion – and that’s before you’ve considered projected profits, market compatibility and all the other factors that will influence your decision.
Of course, opening new premises can be extremely expensive, and not viable for small start-ups. A lower-cost alternative is to open up an online store. This is far cheaper but still enables you to target a much larger number of customers, and even take your company global!
4. Buy or merge into another business
Buying a business that already exists is another way of expanding your own. This kind of acquisition, if undertaken correctly, can enhance growth possibilities even when an industry is suffering. Your first port of call should be a business agent, who will be able to advise on suitable opportunities. Merging with another business is another popular way to consolidate your presence and grow as one.
Success will usually depend on customer retention – keeping your customer base and that of the other company on your side throughout and after the buyout or merger.
5. Offer your business as a franchise
Franchising your business entails licensing somebody else to run a business under your business name. It’s usually more complicated than that – you’ll give them support, training, and even assets to help them on their way. Becoming a franchisee is a popular way to become part of a successful organisation, and from the franchiser’s perspective, offers great development potential.
However, franchising won’t help a bad business. Its only purpose is to replicate a successful business and capitalise on the skills and investment of new franchisees – people who will need to be convinced of your own business’s growth and future.
Assess your options and set yourself goals
Be honest about your capabilities as a business and establish what would most benefit the future of your company. Know what you want to attain – is it higher turnover, or a greater market share? Set yourself goals and make decisions (especially high-capital decisions such as physical expansion) based on your needs as well as on demand.
Alexandra is a consultant with Christie+Co, a business brokerage company. She writes on topics such as business development, startup expansion and business investments. She is based in Oxford, UK.