Business expansion is a strategy that can be used by companies to continue developing their business. It will assist companies to find new opportunities and optimize the use of resources.
A business will continue to grow up to a point. After that, companies need to find a way to gain more profit.
When is The Right Time to Expand Your Business?
The expansion of your business cannot be done recklessly without a comprehensive plan and a strategy. The process is more dangerous if it is done at the wrong time, rather than not doing it at all.
Companies that want to grow their business need to consider several things. Here are some factors that determine the time you can expand your business.
A loyal customer base
In the beginning, companies need to have a loyal customer base before they can expand their products.
It’s important for companies to have customers who always purchase and use their products. Loyal customers are a strong foundation for them to keep growing. The fact that customers are satisfied with the products shows the demand for sustainable products.
Customers ask companies to expand
When companies have a loyal customer base, some customers want to find the products easily and are available in many places.
For instance, when they travel or move to other places however they can not find the products, customers will suggest for companies to expand their products distribution network or open new stores.
The business has profitable for more than 3 years
Even though companies have experienced increasing their revenue, it’s not enough to make companies expand their business.
Companies profit can increase drastically however it’s just temporary or seasonal. However, a stable profit in the long-term for example 3 years can be a sign that they are doing well.
The market are growing
Businesses with a growing market can expand their products. The market growth is a sign that there are many potential customers wanting to purchase the products. Without market growth, expanding the business will be difficult.
Stable business and positive cash flow
Companies must have a stable fund with positive cash flow. Selling many products everyday can still help the business run, but it’s impossible to say that the fund is stable.
Businesses which can not manage their funds properly may face instability despite having many customers. Before expanding business, it would be good if companies have stable conditions.
Running a business is not only about selling lots of products, but there are other aspects that need to be considered to make companies become successful.
A thorough plan is essential for business expansion as it impacts the organization. Unstable businesses will face risks when they decide to expand their products.
The Type of Business Expansion
Business expansion can be different for each company. There are many strategies that can be chosen.
Each business has their uniqueness, therefore there is no guarantee a particular business expansion strategy that has been successfully implemented by a company will be successful for other companies as well.
Here are some types of business expansion strategies,
Provide a new offer or discount
Adding new offers can be a product or new services. To be able to do that, we need to understand what kind of product or service that customer wants.
Businesses need to evaluate the market and discover new opportunities. Do the market research and interact with customers about the offering they want to get from your business.
Please, keep in mind that when you want to produce a new product you should make something similar or complementary to the main products .
Optimize the existing market
Expanding business is not always about getting new customers. It can also be about selling more products to the existing customers.
In order to implement this strategy, market segmentation is necessary to identify the customers who want to purchase the most. Based on the characteristics of the customers chosen, such as age, location, and purchase history, the analysis is able to categorize them.
After finding the most profitable market segmentation, then companies will focus on selling and marketing in the chosen market segmentation and then expand their business.
Claim a certain niche market
It is not only about expanding the market, but also about narrowing it down to the specific customers. Niche market is a part of the market that is very specific and can be focused on products or services.
One of the benefits if companies only focus in a niche market are less competitors and less resources. With a niche market, businesses can increase their brand loyalty and the growth of word of marketing strategy will be stronger.
Move to the new market
When your business moves to a new market, it means you try to sell your products to new customers. New markets can be customers in other locations.
This may also mean opening a new store or increasing marketing efforts for the new customer segment.
It will be better if new locations companies aim at have a potential market so they will need to find strategic locations. You can do the research first before determining the location for the new market.
At some point, the local market will reach saturation. The only way to be able to do expansion is by expanding abroad.
Companies may be frightened by this step since it will be filled with challenges. However, there will be more opportunities as you can sell your products or services to many customers.
International expansion can be started by partnering with local parties to manage business operations. Companies need to partner with them since they have a deep understanding about human resources, payroll, and local law.
Start to franchising
One of the best strategies to expand your business is starting a franchise. It is a process when we open a business in different locations with people who are willing to invest their money and energy into it.
Franchises provide a controlled environment in which entrepreneurs can grow their businesses without worrying about competitors. A company must plan its franchise system so that it can be executed successfully by a partner.
Get new business
In a short amount of time, a business can multiply its size by purchasing an existing business. To do so, you will need to find a business that complements your existing business.
Purchasing a new business will be costly so you need to be financially strong. We need a strategy so that the new business can strengthen the existing one.
It will be good if the new company can reach new customers and broaden its product range. Business that has been running steadily and having a loyal customer base can be developed through business expansion.
Several strategies can be chosen, and you need to choose the best one for your business. Before performing business expansion, we can consider several things such as financial condition, the type of product, available resources, opportunities and challenges that exist in the market.
Increase Expansion Success with LOKASI Intelligence
One way to grow a business is to expand the products and customer base. The expansion must be carried out carefully to avoid expansion failure like choosing the wrong locations, if it happens, companies may lose money instead of gaining it.
The whitespace analysis features of LOKASI Intelligence can help businesses expand successfully and avoid failures. Businesses can find strategic locations to open new stores using this tool.
Moreover, by adding performance prediction features, businesses are able to predict the performance of new stores.
Find out more about how whitespace analysis features can help businesses to expand their business by contacting [email protected] or WhatsApp at 087777977731.