Although there is much talk about how the economy has never quite recovered after the global financial crisis in 2007, this gloomy perspective has not stopped some businesses from weathering the storm and flourishing.
The reason for their success is often due to an uncanny ability to stay on track with their long-term goals; stay true to their vision of what is possible; adjust to suit changes in the marketplace, and slash unnecessary overhead costs to create a higher return on investment.
Expansion also involves timing. Expanding at the wrong time can result in unexpected problems. Expanding at the right time can result in unexpected momentum, like having the wind behind your back. Deciding on the right time depends on assessing how well your industry is currently doing.
Once a business model works, then there is no reason not to do more of what works. If the timing is right, scaling up a business is the next logical extension if you are ready to conquer complexity.
5 Ways to Expand A Business
When it comes to expansion, there is actually no shortage of ways to do it. Here are five possible ways to do it:
- Survey your customer’s purchase decisions. Look at what your customer’s have purchased in the past and figure out what else they might need. Rather than guessing what they will want, it’s safer to survey them, asking what problems they are having and how you can help.
- Research your competitors. See what other competitors are doing better than you. Perhaps, they have more modern equipment, better marketing, or provide customers a wider selection of choices. By observing what works for other companies in your industry, you can reinvent your own.
- Review qualitative variables. Think about how you can improve the soft skills used in your business. Does your staff provide excellent customer service? If they do, can it be improved still further? What else can your company do to engage customers? Perhaps, it is improving your social media presence or providing more community-oriented services. Sometimes your business may not need more marketing to grow faster, but simply more enthusiastic advocates from a larger pool of satisfied customers.
- Consider outsourcing time and cost intensive operations. Expansion can also include improving your business processes. It may be less costly to outsource some aspects of your business and run a more nimble outfit. For example, one huge expense is administration. Something like payroll requires considerable expertise to comply with labor regulations. However, outsourcing the work can streamline how you run your business. A good example of this is ADP Electronic Payment Systems & Services, which include wage payment solutions such as payroll cards, increased electronic payroll adoption, and reduced complexity.
- Investigate other geographical markets. You can open up offices in new geographical areas, including developing an international division. If you have figured out how to sell to your local market, perhaps there are other states or countries where your goods will be just as appreciated.
Choosing the Right Type of Expansion
With all the numerous forms of expansion available to you, you may not be able to do them all. How do you whittle down your choices?
Here are three ideas to consider:
- Research what has proven to work well in your industry. Notice if there are any industrial trends that you can leap on right now.
- Review your resources. There’s no point expanding too fast and spreading your business too thin. Your resources go beyond money and talent. It also includes time to implement your strategies.
- Learn vicariously. Review case studies of similar businesses that have done what you are planning to do. Did they achieve the results that they had hoped for? Sometimes what looks good on paper may not actually work in the real world.
Risk vs. Reward
While it is exciting to think of scaling up a business because it is working well, there is no guarantee that expanding your business will continue to reap rewards. Your risk may be greater than your imagined rewards. Do a risk-reward analysis.
Here are some questions to consider:
First, consider economies of scale. Will expanding your business result in positive economies of scale? Is there a cost advantage or disadvantage to operating a larger business?
Second, consider how expansion will affect your customer base. Growing a business has many challenges. One is maintaining the same level of quality. Will your customer service department be in a position to help a new influx of customers while still keeping existing customers happy?
Third, consider how the business will affect you, your family, and your staff. If you have a small business that suddenly becomes a mid-sized one will you have to work more and spend less time with your family? How will expansion affect the well-being of your core staff members?
Starting Your Expansion
If after you have considered the many aspects of expansion, weighing the pros and cons, and decided to go ahead, how should you begin?
If you are focusing on internal growth, make a plan and figure out how to allocate resources to improve your business
If you are focusing on expanding your market reach or acquiring a new business, plan on how you will roll things out according to a realistic timetable.