Sustainable business growth is key to long term success. If your business isn’t evolving and growing, it’ll stand still while your competitors stride ahead.
But that business growth and expansion can look different to different business owners. Whilst one small business owner wants to expand their business globally, another may aim for more local market share, increased profit margins or to try diversification into new product lines.
If you want to achieve sustained growth, start with a thoroughly considered business expansion strategy. Whether you want to explore markets in new regions, introduce different revenue streams or extend your market reach, you need a roadmap to help you do so. That’ll also help you to understand when is the right time to take that leap.
Here we’ll go through six of the best business expansion strategies to help you take your business to the next level.
What is a Business Expansion Strategy?
When you’ve reached a certain milestone of growth with your company, you tend to look for the next new opportunity. Business expansion strategies help you to identify additional opportunities for business growth and to generate more profits. It’s about going for new business beyond your existing market and creating new paths for sustainable growth.
As an example, say you’re a local physio. You’ve built up a good customer base and you’ve earned a great reputation. What next? In order to penetrate new markets and reach out to a broader customer base, you need a well-researched business expansion strategy. You could open up another clinic in a new location. You could partner with a local health club to cross-promote your services to potential customers. You could look into franchise opportunities. Thorough research and planning will help you to identify which type of expansion strategy is the best option for your small business.
Before You Consider Business Expansion…
These ideas are all very exciting, but let’s not get ahead of ourselves. Before you dive headfirst into planning your global business expansion strategy, you need to make sure you have the basics in place. Ask yourself:
- Have you got a business plan?
- Are you in control of your numbers?
- Do you have a list of customers who are willing to repeat purchase from you?
- Are you in control of your time?
- Have you got three or four marketing strategies that are pulling in quality leads?
If you answer yes to all of these questions, well done and carry on. If not then don’t pursue business expansion just yet. Get those foundations in place first before you move on.
6 Examples of an Expansion Strategy
There’s no single solution or route to business growth and success. Opportunities and challenges will arise whichever route you take. Here are six of the best business growth strategies for those who’s business goal is to expand.
1. Market Penetration
This is about gaining a bigger market share of your existing market. It’s familiar territory, you want the customers that you’ve already connected with to buy more or new customers like them to engage with you. You might reward existing customers with loyalty schemes, entice new customers with special offers and price promotions, or add new products or services to extend that market reach. Listen to customer feedback and enhance your offering to meet their needs.
“Would you like fries with that?” McDonald’s know how to upsell more of their existing products to their current market. Similarly, they introduce seasonal specials and new products to entice customers in.
2. Marketing and Promotion
Do your market research to find the best ways to reach your target audience and retain your existing customer base. Social media’s a great way to engage your customers and build brand loyalty and a community.
Focus your sales and marketing efforts on your most profitable target market segment and tailor your business expansion with them in mind. That may be identifying a niche group that aren’t being served well by your competitors, and that you can help with their problems.
3. New Market Expansion
This is about introducing your offering to a new market – be that geographic or type of customer. To identify these new markets and more potential customers, it’s crucial to do in-depth market research to identify viable market gaps, understand local market conditions and discover new customers that fit with your brand.
Typically, this is the expansion strategy for businesses that have reached a plateau. You’re probably in a strong position but want to expand and gain new customers in different places. That could be in another town or another online platform for example.
For that local physio exploring expansion plans, this growth strategy may involve opening up a second clinic in another location nearby.
4. International Expansion
If and when the local market becomes saturated, international expansion can seem the logical next step. International growth is a bold move with a heady mix of challenges and opportunities. You’ll need to get your head around different legislation, compliance and regulation for starters. It’s advisable to hire some local people who know the area and the international market you want to attract.
Remember, that the business model that works well in your local area may not perform in the same way elsewhere. Don’t skimp on the research into your global expansion strategy. You really need to understand that different market, and adjust your business plan and processes to suit the international environment.
5. Franchise
If you decide to franchise your business, you allow other entrepreneurs to open and operate their own version of your business. It keeps the same brand name, operating system and guidelines that you’ve set up for your existing business. But someone else manages it day to day.
The big question is, “can your business function without you?” It’s essential that the processes are in place for your business to not only survive, but thrive without you.
Franchising can be a relatively low risk way of expanding into a new market as the franchisee is the one putting up the money. Their marketing efforts can benefit your existing business too. But you do need to be willing to let someone else run that business which has previously been all yours.
6. Joint Venture
You don’t have to go it alone as a solo entrepreneur. Find a strategic business partner that fits with your business. Pool your resources to create a new business entity you both own and operate. That could be through a joint venture, or go a step further with a merger or acquisition.
If they’re operating successfully in the new market that you’re keen to crack, this can be your way to create a foothold there. A joint venture between your businesses can be mutually beneficial if you both bring something that the other needs.
Perhaps they have expertise in particular product development that could enhance your offering. You may benefit from the economies of scale that a partnership can bring – like bulk buying.
Take the example of a local hairdresser who wants to bring in a new revenue stream. A joint venture with a local beauty therapist may bring new customers into their salon. Hair clients may want beauty treatments and vice versa. Similarly, the hair and beauty business owners may find cost benefits from ordering products together and saving on delivery costs. Win-win!
Top Tips for Businesses Looking to Expand
Plan and prepare: you need a considered plan with definite timelines to implement a market expansion strategy effectively.
Research thoroughly: explore new markets, market segments and potential demand for new products or services before you leap into unknown territory.
Set KPIs: decide upon specific business goals and continually track and monitor progress towards them.
Be adaptable: business plans are living documents and need to be flexible. You need to adjust your business models, marketing strategies, and operations to suit local markets.
Get Help Before You Take that Leap
Business expansion is both exciting and terrifying for small business owners. But you don’t have to go it alone. ActionCoach, Phil has helped hundreds of entrepreneurs to grow their business. He’ll help you to develop a realistic business plan and stick to it, so that you achieve those business goals that you dream about. Chat to him about it today
