Want to expand your business (or overcome stalls in growth)? You might look to new markets to extend your reach and build your customer base. This strategy is a good one for many businesses, so long as you take it on with thought and consideration.
Here, you’ll learn what you should know before you expand your business to new markets. You’ll also get expert tips on how to do it to up your odds of success.
Is my business ready to expand?
Expansion isn’t a band-aid solution. If your business is struggling with cash flow concerns, operational issues, or performance matters, reaching new markets won’t be the answer. Businesses that thrive through expansions are, most often, on solid footing before taking on the challenge:
They have a strong base of customers in their current market.
|They’re meeting or exceeding other essential business goals.
They have a team of employees and/or advisors who can help them thrive through challenges and hold down the fort on their current operations.
They have the cash they need to expand and ensure they won’t strain the resources their business needs to operate today.
These four factors are important, but there are ways to expand your business into new markets without them:
My customer pool is sparsely populated, unsteady, or unpredictable.
Make it work: Study other markets and determine your odds of success. Shifting or expanding to a more lucrative market with fewer competitors or greater, steadier demand for products and services like yours could help your business tremendously.
I still haven’t hit key goals for my business.
Make it work: Expanding into a new region might be a logical step even while you’re working toward other business goals. But before moving forward, ensure that you aren’t struggling because of any of the following factors (which should be addressed right away):
My business is a one-person operation.
Make it work: Successful expansion is certainly possible so long as you have the time, energy, and expertise to invest in a new challenge.
I don’t have enough cash on hand to take on an expansion.
Make it work: You may be able to fund your expansion through external sources of funding available for owners of growing businesses
What do I need to do to succeed?
Research is your key to success. Take these steps to explore your expansion options and form a strategy that will help you access a new customer base:
Step 1: Define the market you want to expand into.
Before choosing a city or region to expand into, weigh your options. It can help to consider these must-haves:
Access to a customer base with purchasing power and a desire for the products or services you offer.
Market data can help you understand the average incomes and purchasing power of a given region, but you can also conduct surveys with people in that market to understand if they’re willing to spend on solutions like yours.
Interested in tools that can help you understand your market? The following sites may help:
Affordability to house another retail site, garage, warehouse, distribution center, or any other real estate your business may need to operate in a new area.
One of the best moves you can make here is working with a commercial real estate agent in your target region. This pro can help you understand the rent and purchase costs you’ll need to cover.
Would you like to connect with a commercial real estate agent in that market? Click the button below to get started:
Ease of finding qualified workers who have the talent, skill, and drive you need to succeed in a new location.
It might be possible to lean on your current talent pool to help you expand and serve a new market. But often, you’ll need to hire more people to take on the task—and ensure your current employees’ quality of work doesn’t suffer from added work.
You can use job boards, lean on word-of-mouth referrals, or use other recruitment methods to find the team you need to succeed, but be sure to do it well in advance of your target expansion date.
At the same time, you might consider introducing more marketing, process, and operational automation to lighten your team’s load and allow them to shift their focus to more strategic work.
Then, spend time building your knowledge on the market itself. Start with these topics:
- Whether people in that market need or have interest in products or services similar to the ones you offer.
- Whether people in that market are using substitute or competitor products today.
- What people in that market are willing to pay for a product like yours.
- Whether your target customer base is growing, stable, or shrinking.
- How your customers prefer to shop (online or in store) and the role word-of-mouth plays in their community.
Step 2: Understand the impacts you’ll face when you expand your business.
Expansions can help you access more customers, build brand recognition, and achieve more sales. And as demand grows, you might be able to realize some important cost savings such as bulk discounts and more efficient uses of your resources.
But, expansion comes at a cost. We hinted above that there are real costs, including hiring more employees, securing more sites or vehicles, and ramping up your marketing efforts. There are also costs to buying new systems to handle a larger workload. There are costs on your time and your current rosters of employees’ time because your focus will be directed toward the expansion rather than, perhaps, improving the efficiency of your business or working on a strategy for your current market. With those costs are opportunity costs. You may not have the time, energy, workforce, or financial resources to go after other opportunities such as partnerships or even expanding to other markets because you’ll be invested heavily in the expansion effort you selected.
Be sure to understand these costs and determine whether you—and your business—are up for the challenge before proceeding.
Step 3: Study the competition you’ll be up against.
Before deciding to expand your business, take time to understand which businesses have already established a presence in that market—and who may be considering an entry. Competitive analysis can help you determine what and how others are selling to their customer base and what you can do to outperform them.
Here are two keys to getting started:
- Do more than identify your competitors. Study how they’re marketing to their customers, interacting with them through social media, and using their physical and virtual storefronts to leave a lasting impression.
- Don’t be scared away by the competitor count. You might find that a market you’ve been eyeing is already rife with competitors. However, that doesn’t mean that your target customers are satisfied with what’s offered or the service they receive from them. Read reviews and talk to people in that area to learn how well their wants and needs are being addressed today.
Step 4: Figure out how you can position your business for success.
Take stock of what you and others are up against in vying for customers. Then, brainstorm how you could position your business to build brand recognition, win new clients, and endure the challenges you see on the horizon.
In our article, What Do You Want Your Business to Be Known For?, we’ll show you how to find the single right identity for your business. This important step will help you find direction for your activities and goals. It’ll also help you find a voice that resonates with you, your team, and your customers.
Step 5: Develop your plan to expand your business.
Using all that you’ve learned about your market and competition, you’ll need to form a plan for your success. This plan should include your marketing and sales strategies, pricing plan, sales and revenue goals, and key performance indicators that you’ll need to work toward.
As you build your plan, consider how you’ll generate interest for your business and attract new customers. Think about what should happen next, when you win those customers, too. How will you retain them, encourage repurchases, and drive loyalty and advocacy for your brand? Fold in plans for social media and other channels to connect with your market and build the reputation you need to claim a healthy market share.
There are many other factors you must plan and account for. This article will help you get started:
What is the right way to expand my business?
You can move organically into a new market, applying the same strategies you’ve already used to find success. There is a bit of risk with this approach. It can be costly to enter a new market where there is little promise of success. Growth can also be slow. Still, it allows you to stay in control and lean on your what you know to make inroads.
Another option is to buy a business that’s already established in your target market. An increasing number of business owners are selling their successful enterprises (many to retire) to buyers who want to take on a high-performing business with experienced employees and a steady base of customers. You can use business search sites, such as bizbuysell.com, to find businesses for sale in your target market that may align with your objectives, or you can take other approaches to buy businesses that aren’t yet for sale.
Finally, you could develop a franchise model for your business. Here, you might license your idea, business name, and business model to other owners who can follow your practices and succeed in other markets. Franchise consultants can walk you through the process you’ll need to take to get started. Here are a few teams that may be able to help:
I need to grow my business, but I don’t think I can expand to a new region. What are my other options?
There are ways to expand your business beyond setting up shop in a new city.
First, you could offer your products or services to another industry or demographic. Think about how you could repackage, retool, rebrand, and perhaps reprice what you offer to appeal to another market segment. Lots of successful owners do this. They target a market with more purchasing power and desire for their products or services.
Log into your owner’s portal for a free step-by-step guide to expand your business and plan for growth.