Initially, a business requires few years to develop a strong foothold in the market. Once this is achieved, the next thing that comes in the minds of owners is expansion. Taking the business to a higher level, where it can cater to a larger base of customers, is ideally the target of owners. A business needs strategic planning and analysis before actually starting the expansion process. Missing out on these points can adversely affect the profits, and may result in loss of established market position. Expansion can be achieved in many ways. It is up to the company to decide which way is the best for its expansion.
Tips for Business Expansion
Become a Franchisor
Franchising has lately become one of the most successful methods of expansion. It provides the owner some control over the business. Internal processes can be uniformly maintained among all the franchisees, thereby, creating a unique brand image. This is necessary to catch the eye of prospective customers who can later become real customers. Franchising does not require significant financial input on the part of the franchisor and also helps in earning fees from franchisees. By doing so, a business can enhance its visibility in many locations without making any significant investment.
Diversify the Business
Diversification is a strategy used by many businesses for expansion. It involves developing new products and entering new markets, so as to increase the profitability of the organization. A variety of items in the product basket of the organization serve as multiple sources of income and help in maintaining profits, even if, some of the products fail to perform well for a certain time period. Diversification can be attained by entering into related segments, for instance, a notebook manufacturing company can add other stationery in its product basket so as to cater to a larger customer base.
Open New Outlets
A business can expand by opening outlets at new locations, so that customers of those areas can make use of the product or service offered. Setting up new outlets requires a lot of money therefore, businesses must undertake feasibility studies to learn the pros and cons associated with it. This form of expansion is good for ventures that have a consistent source of income.
Form a Business Alliance
An organization can grow by forming an alliance with another party. A business alliance is formed between two businesses who wish to expand by sharing the cost of expansion. The parties agree to share the risk and profit associated with the expansion process. An alliance can be a joint venture, investment alliance, sales alliance, location-specific alliance or a solution-specific alliance.
Apply for a Product License
Gaining a license reduces the risk for a specific product or service, of being illegally used by someone else. This is a low-cost method of expansion by which the license holder can enjoy royalties, by allowing other businesses to sell the product, without actually getting involved in the manufacturing or selling process. This is the safest method to maintain ownership over the product and earn profits.
Increase Customer Base
Acquiring more and more customers is the key to expansion. Businesses must try to serve customers of related segments to increase profitability. For example, pharmaceutical companies not only target customers going to retail chemists, but also the ones that are found in hospitals. By increasing the customer base from retail chemists to hospitals, pharmaceutical companies are capable of generating more business.
A quick means of expansion that businesses can avail is, signing contacts with government organizations. Concerns about external competition are highly reduced by winning a government contract because there is no competition during the contract period. A thorough research is required prior to applying for a government contract. A business must apply for a contract only if it is capable of meeting the terms and conditions associated with it.
Acquire a Business
Acquisitions help in acquiring new customers and increasing income. When a business is acquired, the parent company gets charge of its employees, assets and all other belongings. This helps in expansion and increasing the worth of the parent company. Most of the time, businesses choose to acquire companies that are smaller in size and worth as compared to them. In some cases, smaller companies develop control over the management of a larger firm and retain its name and customers.
Using the Internet for increasing the visibility of a business is a smart way of expansion. Customers are nowadays inclined towards getting details of a product or service they are looking for, through the Internet. Putting up content that is needed by the customers, definitely helps in gaining customer attention and increases the chances of sales.
Government grants for small business expansion are available to provide financial assistance to companies that are ready for it. If you are an owner, it is better to hire a consultant who can give several tips for business expansion, but, it is for you to decide which option is the best. A well-planned approach will help in the growth of your business and you will get excellent results in terms of profits.