Expanding Your Business? 5 Tips to Do It Properly

Although it is a sign of prosperity, business expansions are fraught with risks that entrepreneurs are often unprepared for. Insufficient capital to execute proposed expansion plans, wrong market locations or target audience, and the lack of a transition plan for your existing customer base and workforce are only a few of the many mistakes you could potentially make while attempting to expand your brand. Before you get all excited and start renting out more space or hiring more people, make sure you're doing it properly. Here are five ways to do that:

Figure Out the "Why"

Why are you expanding in the first place? Answering the "why" of it will help you determine if you are ready to make the leap. Increasing gains is not enough reason to expand to a new market as poor execution and picking the wrong market/location can lead to more cost than profit. It makes sense to expand only if you have a firm grip on your current territories and have the resources to pour into a new space.

Figure Out the "Where"

If you're expanding a physical business, such as a retail store or manufacturing company, location dictates a great deal of whether or not the expansion is successful. Figure out if you want to build the structure from scratch or simply lease or rent out an existing office space. Each option has its own pros and cons. Building the space from the ground up gives you more control and customization, but leasing into an already built workspace means a faster transition. Consult an architect in San Francisco CA or your current locale to figure out which option best fits you.

Figure Out What Product/Service to Introduce

Adding new products/services to your existing offerings can be tricky as it adds to your operational costs. You don't want to just blindly introduce a new product/service without conducting enough market research. Figure out which product/service is missing from your current offerings that your existing customer base wants. Then, figure out how much they are willing to pay for that product/service. Lastly, see if your new product/service can be integrated seamlessly into your existing offerings. This will make it easier to upsell to your customer base with minimal changes in marketing approach and effort.

Merge or Acquire

Acquiring another business is perhaps the fastest approach to expansion. A merger or acquisition executed precisely can literally double your business' size in a day. However, it all depends on who you acquire or merge with. Due diligence is key to pinpointing the right candidate to invest in. Furthermore, not every business will suit a merger or acquisition. You may be too small or too big to execute either strategy effectively. Mergers and acquisitions also involve a lot of red tape and paperwork, so only pursue this course if you know what you're doing.

Introduce a Loyalty Program

Keeping your existing customers is far less expensive than acquiring new ones. During business expansion, you might be too busy chasing new leads and territories that you forget to pay attention to your existing customers. Loyalty programs help them stay on board. If there is a concrete incentive to spend more cash with your business, a loyalty program pays for itself in the grand scheme of things. You'll find this strategy being used by both small businesses, such as cafes and delis, as well as multi-billion dollar corporations including Target and Costco.
Without proper planning and meticulous preparation, expansionary measures will fail to achieve its desired effects and, in many cases, can lead to unintended damage to your business' growth and profits.