Expanding a business is not something you should do on a whim. It takes a lot of planning and careful strategizing if you want your business expansion to be a success, but with the right approach, an expansion can help you reach new markets, diversify your product range, and become more successful in your chosen niche.
Draw up a business expansion plan
The most important tip we can give you is to prepare well and have a solid expansion strategy in place. Be clear about what you hope to achieve with an expansion. There needs to be a strong operational reason for undertaking such a task. Otherwise, it will be hard to persuade co-directors, staff, and finance partners to help you achieve your goals.
Do market research before you take the next step.
- Is there a demand for your new products or services?
- Who are your main competitors?
- Are the economic conditions right for an expansion?
Examine each question in more detail.
Survey your target consumers to see if they want the products you plan on selling. Conduct surveys on social media to see if your customers are receptive.
If you are considering expanding into a new market in another region or country, check whether the demand is there and if there are unique hurdles, such as increased regulation, that you need to be aware of.
Don’t overlook what is happening in the economy, both in your country and in any country that you want to target. If there is a recession looming or interest rates are set to rise, now may not be a good time to expand your business.
Sourcing funding for business expansion
Unless you have a lot of capital stockpiled in the business, it’s likely that you will need to acquire funding for business expansion. How much money you’ll require will depend on the scope of your plans, but it pays to look at all of your funding options.
Business loans are often the first place that small business owners look for funding. In the UK, high street banks have business lending arms that may be willing to loan you the cash for your expansion. Your best bet is to try the lender where you do your business banking, as they know you and your financial history. However, don’t expect your business manager to say “yes” without seeing a solid business expansion plan with cash flow forecasts and other relevant figures.
Another option is to apply for a loan from smaller lenders, who may have more flexible underwriters. For example, if you have a poor credit rating, you can explore a UK based lender that offers short-term loans to companies with bad credit.
Build sustainable partnerships
Look for other businesses to partner with, so you can spread the risk and expand faster. For example, look for a business in the same niche but not a direct competitor. Partnering with a compatible business will help you tap into their distribution channels and customer base while they can expand their product range without additional manufacturing costs.
Whilst it is critical to have a detailed expansion plan before you do anything concrete, it is equally important to be flexible in how you take the business forward.
No matter how well prepared you are for whatever happens, life will invariably throw you a curveball. Revise your targets and adjust accordingly, either during the initial planning stages when it becomes apparent you need a new strategy, or if circumstances change once you put your plan into action.
Finally, have measurable goals and monitor these as you progress so that you don’t deviate too far from the plan and end up wasting money unnecessarily.