Growing a business is a constant challenge, and although the new year is carrying cautious optimism, today’s economic climate is still likely making things more challenging. However, by exploring expansion options uniquely available during an economic downturn, you may be able to take your business, and your business performance, to new heights.
If you’ve been using the same business growth techniques for some time, here are a few fresh ideas, uniquely suited to current market conditions, which might stimulate some new thinking on how to expand your business.
1. Organic Growth
Organic growth is the most common form of small business expansion, and may be the way you’ve grown your business in the past.
In today’s economy where consumers are increasingly turning to value over business loyalty, successful organic growth requires introspection. Businesses must examine their relationship with key customers to pinpoint why those customers are, or are not, happy with service levels. Today’s economy may change how consumers perceive your product or service, as their needs regarding price, service levels, and other business factors may be influenced by their economic situation. Transforming this analysis into actionable business improvement initiatives involves hard work and forward-thinking business strategies. It’s about keeping customers happy, investing in the business, and selling and marketing aggressively.
Strengthening relationships with key customers and enhancing the value of your business’s products or services is imperative if you want to grow organically.
2. Location Expansion
If your business has been based in a single location or region, now may be the time to set up shop in a second location or to expand your service area. This could involve opening a business in a nearby neighborhood or city, or making your services available to a broader geographic audience.
Creating a second location is much less expensive than starting a business from scratch, yet it exposes you to many new customers. As such, it can be a way to transform your existing operations into a much more profitable business. Expansion often enables you to benefit from economies of scale that were previously unavailable, providing additional profit enhancement.
3. Acquiring Competitors
It is likely that some of your competitors are struggling in this economy, to the point where they are ready to pursue an exit opportunity. Rather than have them sell to a new competitor, you may be better off acquiring them and folding their operations into yours.
Since you know the ins and outs of your industry, and their business, you are less likely to overpay for it. You may also have good ideas on how to improve your competitor’s operations, leveraging your expertise and experience. In addition, there may be economies of scale that can allow you to lower your raw materials costs or other business expenses.
4. Expanding Into a Related Market
Given everything that you’ve done right in your own business, it’s very possible that you can apply those strengths to do well in a related field. For example, a landscaping service might expand their operations to include a nursery business. There are some natural synergies between the two businesses, with each business potentially helping the other business to do well.
When expanding into related markets, you can start the second business from scratch or acquire an existing business. Acquisitions tend to be faster, less expensive and less risky, but there is something to be said for starting a new business with a clean slate.
Expanding in a related market with complementary products or services will increase your potential customer base, and can likewise revitalize your sales cycle. The larger, more diverse customer base will also put your business in a more desirable position when you’re looking to sell.
Getting Started With Business Expansion
Imagination and planning are the keys to starting a business expansion initiative.
Contemplate each of the expansion methods discussed above and think through whether they are appropriate for your business.
Turn that contemplation into a list of possibilities. For example, which cities might you consider opening up in with another location? What competitors would you buy if you could get them for the right price? What related markets or complementary business lines might make sense for you to expand into?
Once you’ve identified some possible ways to expand, do a little market research to learn more about the expansion opportunity.
For example, in fleshing out geographic expansion, you might travel to the other city and ask potential customers whether they’d be interested in doing business with you if you opened up in their neighborhood. Or, scope out the market for additional competitors that could make your expansion more, or less profitable.
If you are contemplating the acquisition of a competitor or acquiring a complementary business, you can browse business-for-sale listing sites like BizBuySell.com to see what’s for sale. You also may want to talk to local business brokers and find out how they work with companies like yours who want to expand via acquisition. Many business brokers now offer Buyer Representation services, in which they will actively look for acquisition opportunities for you, while still maintaining your confidentiality during the initial stages.
In this market, it’s important to keep your eyes and ears open for potential deals that may come down the road. The key is not to rest on your laurels. What you’ve accomplished to date may be impressive, but with a good expansion strategy in place, rest assured that the best is yet to come!