Are you thinking that it’s time to expand your small business in order to grow? Maybe you’ve trimmed your costs as much as possible and the only way you see increasing profits is to expand in some way.
Expansion may mean offering complementary products to the ones you currently provide or expanding your services to attract a different customer or to get more business from existing ones. In some cases, expansion may involve taking your business across the country or across the ocean. If you are retailer, it may mean opening another store in your own city but in a different neighborhood.
Before you put a stake in the ground to expand, there are several things to take to think about. For starters, you need to consider what type of expansion is right for your company and the industry you serve. Building out your team with additional expertise – on site or by remote working – is not the same thing as purchasing new equipment or inventory to serve a larger or different demographic. Nor is it the same thing as opening a new operation in another city.
The next question to ask is how your business will benefit from an expansion. Ask yourself the following:
- Are there economies of scale: Will there be cost advantages for your business if you expand? For example, you may be able to negotiate better contracts with your suppliers if you buy more to accommodate your expansion.
- What are your competitors doing: Are they expanding? Have they uncovered a new market opportunity among your targets that you too can’t afford to overlook? You may decide to follow in their footsteps or come up with another offering that has an equally compelling proposition for the same customer base.
- How will you handle the financing: Will your cash flow support the investment to expand in or will you have to borrow from a bank or sell stock to an investor? You want to be sure you can earn money and still repay whatever loans you take on.
- How will the expansion affect current customers: While you are growing, your attention may shift. You don’t want to lose the loyal customers you have while you work through the expansion.
If you decide to move ahead after asking yourself these questions, here are tips from 13 successful young entrepreneurs who are part of the Young Entrepreneur Council. While the recommendations are particularly related to starting a business in an unfamiliar industry, many are relevant to any business expansion. Here are five that I think are musts to follow:
1. Don’t be afraid to ask questions. Use every networking interaction to learn.
2. Leverage your fresh perspective. Rid yourself of all preconceived notions and immerse yourself in every aspect of the industry to learn as much as you can.
3. Talk to customers and partners every day.
4. Plan as much as you can.
5. Learn why others have failed.
What tips would you add about expanding or entering a new market from your own experience?