To Expand Or Not To Expand Your Business?
Most business owners want to expand their business eventually. But even if they have the money to do so, sometimes it is best to wait until the ideal time for expansion. Here, I’ll answer a few common questions about when, if, and how to expand your business.
Should I expand my business?
A lot of business owners assume that expansion is always a good thing if they can afford it. That’s not true at all.
It would be best if you had a business that is already thriving to consider growth. You should already have customers, and you should already be making a profit. Do not use expansion as a way to reach more customers, hopefully. Instead, use expansion as a way to meet a demand that already exists.
What’s more, some business owners might not even want to expand. Are you ready to give away a lot of control over your company and move out of “small business” territory in pursuit of greater profits? Because expansion is the first step down that road. You might be happier running a modest lifestyle business.
The bottom line is that whether or not you should expand your business really depends on your situation. Do not jump on the opportunity to expand just because bigger companies are traditionally associated with success.
When should I expand my business?
As I mentioned, you need to wait until the perfect time to expand. Luckily, determining that time is simple. There are three questions you have to answer “yes” to, and that’s how you know it’s time for expansion. They are:
- Do my customers want me to expand?
Again, expansion should be a way to accommodate the demand you have, not create more demand. Whether you’re talking about literally expanding to new locations or simply expanding the line of products or services you offer, you should be able to see your customers clamoring for the expansion before you actually do it.
Here is a guide on how to find out exactly what your customers actually want.
- Is my industry growing?
If your industry is on the upswing, expansion is much less risky. Because even if you overshoot in terms of your expansion, the industry growth will probably pick up the slack you accidentally created.
On the other hand, expanding business in an industry without growth is very risky. You often won’t get the results you wanted if you try to do it, and you don’t have any recourse in that situation without losing a considerable amount of money.
- Do I have enough money to expand?
Are you already making profits? Do you have a large chunk of cash sitting in your business account? Hopefully, you answered “yes” to both of these questions, because expanding is usually like starting a brand new business — your expansion will take quite a while actually to become profitable.
What’s the first step in expanding my business?
Find out how you can reach the newest customers possible. That should be the driving force of any kind of expansion.
Could you open up your business to a whole new market just by adding some features? Then that will dictate your first step. Or maybe you already have more potential customers located in a different geographic region, but they just cannot reach your stores? Then perhaps you need to open up more locations nearer to them in order to attract their dollars.
Either way, make absolutely sure of what you need to do to attract customers before getting started.
What are the different kinds of business expansions?
According to Forbes, there are seven main types of business expansion. If you decide you are going to expand, you need to study the seven types and decide which sounds right for you. The seven types are:
- Introduction of a new product — Adding new products or services to your existing offerings, but not expanding physical/digital presence.
- Taking a current product to a new market — Expanding your presence to expose more markets to your existing products.
- Licensing the product for others to make — Letting third parties handle production and maybe even distributing your product and only taking a cut of their profits.
- Starting a chain — Establishing more physical stores to raise your company profile and alert more people in your current target markets
- Turning the business into a franchise — You can sell other companies the right to use your company’s branding and business model. You can also set regulations to ensure the franchises don’t stray from your mission or brand.
- Growing through acquisition or merger — Just as people with similar professional interests and purposes can work well together, two businesses working together are often better than one.
- Seeking foreign markets — Expanding your business internationally is a whole other ballgame and can be researched in greater depth here.
How can I expand my business online?
In 2020, having an online presence is required for a business to succeed.
If you already have an online presence but want to expand it, don’t skimp on the quality of the people you hire! It would be best if you went all-out on your coder, content writer, SEO expert, and graphic designer. It will be expensive, but it will be well worth it in the long run!
After that, hire a webmaster who will keep your beautiful site running like the well-oiled machine it was meant to be. Your large web budget will go to waste if you don’t.
How can I expand my business without money?
If you don’t yet have a large amount of profit coming in, it’s too early to think about expansion—End of story.
Expanding your business is risky no matter what, but you can minimize that risk if you wait for the right place and right time, and you know what you’re doing. A successful expansion is among the most rewarding experiences in the business world.
HOPEFULLY, THIS ARTICLE HAS HELPED YOU DECIDE FOR SURE IF YOU SHOULD EXPAND YOUR BUSINESS OR NOT! IF YOU’RE DEAD SET ON DOING IT, HERE IS A VIDEO ABOUT 7 BUSINESS TIPS THAT WILL HELP YOU!