So, what it takes to expand a business?
Just like Rome wasn’t built in a day, you cannot expand a business in a single day. It involves years of hard work to expand boundaries and reach a larger stage eventually.
Expand your business in a slow and steady process, just like the development of any country. A faster rate of business expansion can hamper business growth. That said, what it takes to expand a business? Let’s find out.
What Is Needed To Expand The Business?
Various factors must be focused on while expanding the business. They are:
Introducing A New Product/Service
One of the ways to expand a business is by launching a new product or service which either forms part of your current market niche or is similar to it. For instance, Philips launched its home appliance range
It also involves the choice of moving new market. For instance, during Covid-19, start-ups looked at it as an opportunity to expand their business by launching sanitizers in different forms like hand sanitizers, vegetable sanitizer machines, sanitizing spray, and many more.
Hiring New Human Resources
Expanding a business would also mean hiring a new workforce to meet the increasing demand for your product/service. Recruiting new personnel to your current management is also a part of expanding a business or planning for future expansion.
Human resource plays an essential part in any business organization. If you plan to hire new personnel for various openings in your business, this forms part of your company growth and will be regarded as business expansion.
Expanding Business In The Foreign Market
Expanding business in a foreign market is not an easy task. It would mean expanding business in real terms. Usually, businesses with a good reputation within their country take such a decision. Well-established companies with greater workforce and growth can expand their business worldwide.
This is considered as expanding business at a large scale.
Joining Hands With Another Existing Business
A business can also look forward to expanding its business by joining hands with similar existing companies to widen its horizons. For instance, Flipkart and Snapdeal merger, Idea and Vodafone merger are examples that helped companies survive the ongoing competition better and exist with a powerful presence over the market.
As a start-up, your business can also get into fruitful mergers present in your market to expand your business. This could also be a strategic alliance where both companies bring their unique proposition and help them thrive better.
Raising Capital By Launching IPO
Another way to expand your business is by raising new capital by releasing the new public offering. Getting a company registered in a stock exchange is considered one of the best milestones of any budding business.
If you want to turn your business from big to bigger, releasing an IPO can be a good option.
When To Expand Your Business
How to identify if your business is in the stage to think of expansion? A business expansion at the wrong time can prove to be detrimental. Also, expanding without proper planning can prove to be heavy on your business.
Here are some of the signs that can help you decide if you should think to expand your business or not:
Pretty Decent And Loyal Customer Base
A loyal customer base that includes trusted and regular customers is a positive sign. This ensures that the products/services are likable and provide satisfaction. Their increasing demand is an accurate indicator to expand your business.
However, expand your product after conducting thorough research of the market. For overseas expansion like Australia, a detailed study of customer choice, particularly their cultures, should be considered.
Your business may have an increasing demand in one region and none in another region. This is due to the changes in likes, dislikes, consumer behavior, cultural differences, and diversity of the place.
Profitability Of Over 3 Years
How many years old should a business be before expanding? A continuous span of 3 years or more of profitability is another positive indicator of business expansion. The profits should be steady and not subject to seasonal or temporary reasons.
If you think your business model is perfect for a different region, you can expand the business in that particular region. Again, don’t forget to study the area’s market well before making the final step.
Have A Strong And Dedicated Team
Business expansion is a lot of hard work and research. Expansion itself means meeting new demands, new challenges, more customers, more production, and everything at a large scale. You may need to hire staff at a new place to start a new product line, operations management, logistics, and much more.
If you have a solid and dedicated team that can make this possible, business expansion is the right call. Additionally, if your business can afford to hire new employees before the business expansion, that can be well thought of too.
Scope In Your Business Market Niche
If your product/service falls in the market niche that is currently at its peak and it’s growing tremendously, there is no reason why you should not grab the opportunity by expanding your business. For instance, in some of the markets like FMCG, smart devices are currently showing a steady growth due to constant demand.
Running Out Of Space
Sometimes expanding your business could simply mean shifting your official place of work, just as Amazon was started from a single room and now has headquarters in three big nations of the world.
Similarly, if you think your business has grown out of the small room you are operating from, you can expand your business by renting out or buying a new registered office for the same. If your current business space is too cramped up with all the employees and essential documents, a business can also be expanded to a bigger space.
Turning Away Prospective Customers
Do you receive queries, emails, and messages from prospective customers to make your product available in a certain region you are not operating in? Are these messages too much to handle, and do you think you are losing out on a good opportunity? Do your existing employees have too much work to do?
These are some of the signs that indicate the opportunity for business expansion. After due consideration, steps can be taken to expand your business in more regions.
What It Takes To Expand A Business: Common Troubles In Business Expansion
Expanding a business is not as easy as it looks. You will come across many troubles as you begin the process of increasing your business. The smart way would be to learn from the mistakes of other companies.
Research well before expanding your business to overcome the troubles in an organized manner. Here are some of the problems in the business expansion that you can avoid:
1. Lack Of Right Tools And Systems
Expanding business means using the right tools and systems that can ease the process of expansion. This pertains to using advanced technological tools and software like CRM software, payment processing, and more.
Make sure you got idle funds to accommodate such overhead expenses to make the expansion process easy and smooth.
2. Improper Human Resource Planning
After a proper and deep analysis of business expansion, follow proper manpower planning to ensure the current manpower is enough to deal with a surge in demand and related task force.
If not, take proper measures to hire new people, assign tasks to new management and meet the growing demand so upper management. Make sure all of this has been thought through before proceeding for sudden expansion.
3. Financial Problems
It is common in business expansion to underestimate the need for finances. During business expansion, the cost is always higher than you expected. Therefore, it is super important not to misjudge the expenses associated with business expansion.
The financial requirements should be kept conservative to make up for the extra cash flow. Business expansion requires huge cash flows in the form of more capital to hire new employees, hire extra space, shipping, purchase of inventory, setting up business in the entirely new area, and a lot more.
To avoid the mismanagement of funds, proper cash cycle, inventory management, focus on supply cycle management.
Modern Strategies Helpful In Expanding Business
Are you following the traditional means of expanding means? They work well, but taking advantage of the modern means of expanding business can ease your task. These techniques/strategies help business owners look at business expansion from a wide perspective.
Some of these strategies to follow include:
1. Work On Building A Sales Funnel
Sounds too technical, but it isn’t. Sales funnel is a key to eCommerce business owners. It is one of the ways to expand your business using digital marketing.
The sales funnel helps you automate the process of business expansion. The sales funnel acts as a step-by-step procedure for increasing your sales, creating new customers and expanding your business thereafter.
The first step is to create a sales funnel. Depending on your market niche, the sales funnel should be created accordingly. A usual sales funnel starts with creating awareness about your brand, piquing users’ interest, making a buying decision for them, and finally converting it into sales.
2. Build An Email List
Are you steering your business in any unknown territory? Building an email list can help. You can create awareness about your brand in such territory by sending random emails to your prospective customers in the area.
Get an email list from email building companies to send emails to many people. This is one way of reaching out to your prospective customers and allowing your brand to be popular.
This is an effective means of spreading the word if you expand your business in a new area.
3. Leverage Online Platforms
Another method to expand your business with less hassle is by listing your companies on global platforms. If you have a product to sell, list it on Amazon, eBay, or other similar platforms in your area.
If you are into hospitality, list your business on Airbnb, HomeAway, MakeMyTrip, or other platforms popular in the area. Similarly, you should always list your business on online listings like Google My Business, SEMrush, Birdseye, and others.
4. Create A Customer Loyalty Program
Are you expanding your business to increase sales? Building a customer loyalty program is one static way to do it without much ado.
Retaining your existing customers, making them feel special through loyalty programs will allow them to recommend your brand to others. Customer loyalty programs are an effective method to gain new customers while keeping your existing customers closer.
For instance, providing early access to special discounts and free shipping are some of the benefits provided to customers in loyalty programs.
5. Using Competitive Intelligence For Research
Do you want to perform deep research on your competitors, customer behaviour, and the market? In the current era, make use of modern means to do so. This provides more enriched research through accessible means.
Use online software programs and platforms to help the business conduct a better competitive analysis. Platforms like SimilarWeb, and AdBeat are some of the platforms that provide automated data on competitors and allow better research as per your needs.
This was everything about what it comes to expanding a business either locally, globally, or just for increasing the sales of a business.
Any business should make optimal use of the information and data available before taking any step to expand the business. Expanding the company is a long-term process. However, when successful, it can benefit from active involvement in studying the changing consumer behaviour patterns, changing needs, and demands.
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You might also enjoy these popular International Expansion related articles Steps To Successfully Expand And Scale Your Business, What To Consider When Expanding A Business Internationally and Which Option Should You Use To Expand Internationally on a similar topic.
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