Business growth needs to be managed, or it will affect your business negatively, losing you many of the orders, which prompted you to consider expansion in the first place. So it is very important that you plan your expansion carefully, and implement it in slow, controlled stages so that your customers and staff feel very little of the effects.
The following are some of the issues you need to consider when making you expansion plans:
Expanding in the existing market
One of the features of business expansion is growing the existing market. You already know who your current market is. A geographical area may define them, or they may be defined by certain demographics data. When you expand your existing market, it means that you are shifting the parameters.
That may mean, opening another outlet and catering to the same demographic group. Or you may be planning to attract a new and different group of customers. The key to success when you expand your market is to make sure that you continue to meet the needs of your existing market so that you don’t lose them in the process. Know what they need, and make it clear that you will continue to give them the same product that made them your customers in the first place.
There are many reasons you may be considering diversifying your products. It may be because you believe that you have taken your existing products as far as you can go, and need to explore other possibilities. Or perhaps there has been a demand for new products in addition to what you offer, and you wonder if you are wasting opportunities when you turning potential customers away. Regardless of the reasons, diversification needs very careful management.
Before you begin, you need to consider the following:
- Does the new product complement what you already have on offer?
- What is the potential and demand for this particular product?
- Is your new product suitable for your current stable of clients, or are you going to have to start speaking to a new group of potential customers?
- Is the new product taking your business in a new direction and changing its focus? If so, is this the direction you want your business to take?
- Do you know who your competitors are with this particular product? Your customers spent their money somewhere before you hit on this great idea. Do you know who or what that was, and how you plan to attract their attention to your new product?
Starting a second business
One of the ways of expanding your business is to actually start a second business. In this case, you will need to follow the steps you already did in establishing the first. Your major issues in this case are:
- Resources – do you have enough financing and manpower to run both businesses? Make sure that you don’t spread your resources too thin.
- Have a plan in place to make sure that your current customers; employees and business associates understand that you are not abandoning your original business. Instead, you are spreading your businesses’ wings, and exploring other opportunities. Be careful though: these days, ‘business focus’ and ‘niche’ are very popular words, and your business associates may see your new venture as proof that your company has lost its focus.
Once you know what needs to be done to expand your business, you need to assess your existing resources, as well as determining where else you will find more. It is very important that you take reasonable risks with your existing resources, so that you can keep running the business painlessly during the expansion process. If you spread your resources too thin, you may very find yourself losing what strides you made in you expansion, or worse, endangering your original business.
In any expansion plan, the following resources need to be reassessed:
- Finance – Do you have enough capital? If not, where do you plan to get more? What are you going to use to leverage your loan? Is it something that you and your business can afford to lose?
- Human resource – Are you going to need more staff to be able to cope with the new business demands? What skills will your staff need in order to do their new duties properly? Are you going to need to train them?
- Time – How long is the expansion process going to be? Do you have a time frame for each stage of the expansion process?
Success stories and failures
One of the advantages of having a history is that it enables us to learn from our past so that we don’t repeat the mistakes. History also teaches us what worked before, so that we can repeat it and gain the same, or even better results. So, find out who else walked the path you are about to trod and learn from the success and the failures of others.