After you reach a certain stage in your business, ideas for expansion begin to occupy your thoughts. And why not! Sales are up and customers are happy; you almost begin to feel that the business is running on auto-pilot. That’s when you get the itch to start something new, and take your business to the next level. Many a times, entrepreneurs feel they should take advantage of every opportunity that passes by, but this could be devastating for the business. Any thoughts of business expansion should be carefully examined, with the pros and cons weighed out.
The first question that must be answered is whether there is a market to support your business expansion plans. Also understand whether you are venturing into an established, flourishing market or stepping into uncharted waters. Both situations can offer compelling reasons to enter the market; you just have to ensure that the supply-demand gap can be viably satisfied by your product or service.
It’s always better to hire third party experts to help you asses the new business proposal. Developing new ideas for business expansion can be a daunting task. One wrong step and the whole venture might sink. Particularly in the case of small set-ups, business expansion is necessary sooner or later. However, equally important is a well balanced growth strategy. And finally, one size never fits all. There are a plethora of solutions for any enterprise pursuing business expansion, some of which are discussed below.
Franchising: One of the most popular routes to business expansion is through a franchise. Franchising involves acquiring the rights to use and market someone else’s brand, by paying a fee. This offers an opportunity to establish a relationship with an existing, successful business, and does away with a lot of the usual preliminaries that are part of a new venture. The best thing about going in for such a business option is that you get to enjoy the support of an established company, and can hit the ground running. But in the early stages you will incur high start up costs, including royalty payments in return for support in operations and advertising. Also, beware of broken promises! Although it curtails the entrepreneur’s operational freedom to some extent, franchising is the best option for those who work well in teams and have limited business experience.
Acquisition: You could try this out if there’s a business up for grabs that has similar products or services as yours. But before you go ahead, make sure you do your homework well to uncover any discrepancies the current owners may not have disclosed about the business; also try to understand the owners’ motives in wanting to sell. Buying someone out offers great advantages – you will have instant access to a larger customer base, quality staff, knowledge and assets for new product development, and above all, will face reduced competition.
Organic growth: This is perhaps the safest and simplest option. If you own a retail store, opening a second is the most logical path to growth. If you want to open a new store along the lines of an existing store, locate it at a reasonable distance away from the first, so that you don’t land up merely diverting existing customers. Finding an apt location might be cause for concern, as you need to get sufficient space in a suitable area; the logistics should be manageable too! You will also need to hire reliable staff to manage expanding business.
Sometimes, you might not see much value in opening an identical second store; rather, expanding business might offer a better business opportunity. This is your chance to explore innovative ideas for generating another source of income.