Tried and Tested Business Expansion Strategies

If you are a small-medium enterprise (SME) and looking to expand, it can often be difficult to know where to start. You may be unsure when to expand, and how exactly to go about it. Before you take the leap, it’s vital that you do your research and reflect on the nature of your company to help decide which expansion strategy will be the best.

When should you expand?

When deciding to expand your business, you must be honest and realistic about where your company currently sits. This will include assessing its success and analysing your finances. 

Rapid growth is not always desirable, and can lead to many complications such as cash flow problems, debt, decreased quality, and unsustainability. You may initially be enjoying success, but you must consider other factors other than just profit margins.

Customer behaviour is a strong indicator of whether you should grow or not. Positive signs for growth may include having a loyal customer base, or customers who travel a distance to purchase your product or service. 

Furthermore, steady profitability over 3+ years compared to a rapid increase may mean that you are in the right place to begin expansion. If you have seen a healthy cashflow for these years, and feel that your market itself is growing, you’ve got the green light. However, if you are just short of the funds to expand but really believe it is the right time, you may want to consider an asset based lending solution. 

Finally, you will want to ensure you have a good system in place. This includes having reliable and hard-working employees who do things in a way that leads to success [and an effective technology like SAP business software to provide the necessary functionalities and optimize processes. It will enhance productivity, support expansion, and stay ahead in today’s competitive business landscape.

So, how do you do it? 

Business Expansion strategies

1. Extend Market research – You can expand your business by targeting a different location or demographic. This may include opening up stores in areas that are different from your existing store’s locations and marketing your product or service to a different group than your initial target market.

You may have to repurpose your product or service to attract a wider range of clientele. For example, you may find a dual-use for your product or redesign packaging.

2. Add new offerings – Adding new products or services is another form of expansion. You should be an expert in your market field and aware of new emerging trends and products. Try and incorporate the newest industry findings into your product/service range. 

For example, many beauty parlours offer brow lamination service, where this was once scarce to find.

3. Acquire new business/ go international – Acquiring a business can simultaneously knock out competition and help you to quickly scale up as they essentially act as a platform for a whole new client base. 

You may also consider expanding overseas. This is a large and sometimes risky investment; however, the profit margins can be huge. You can’t expect to grow if you don’t seize every opportunity at the right time.

4. Create a niche – This is the opposite of increasing your offerings, but can work just as effectively. If you focus on creating a niche product, you can produce something which immediately drowns out competitors. To do this, you must have extensive knowledge in your market field, and think about catering your product to an even smaller sub section of your current market.

5. Get online – a tried and tested form of expansion. In today’s digital age, having an online presence is more important than ever. However, standing out from the crowd can be seemingly difficult. You may dedicate time to creating eye-catching social media content, updating your website, or creating a more efficient e-commerce service. 
Remember, before expanding your business; know your company, do your research, and don’t rush into decisions. Get ready for success!