Expanding your firm into a new market is a smart strategy to drive growth while also improving your company’s resilience and sustainability in an ever-changing world.
Pursuing development at the wrong moment or without the correct strategy, on the other hand, might pose major business dangers. Before you make the decision to expand your firm, be sure you’ve thought about the following factors.
You can potentially find one or more areas for development by analysing your present business model, product or service offerings, and target markets. You can also analyse the types of solutions you provide to your consumers and how you might improve them to improve their experiences.
For example, the executive team of a prominent clothes shop examines their company’s original business plan. In a world of trends, their mission statement reflects their desire to promote creativity and individuality. Following further deliberation, the executive team determines that any expansion into a new market will be consistent with the original firm objective.
As tempting as it may be to get right into implementing your business expansion goals, it is critical to take your time and conduct your research. Simply replicating techniques that have succeeded in previous markets will not necessarily produce the desired results.
Developing a thorough understanding of each new potential market can provide you with useful insights that will help shape your expansion tactics. Depending on the type of your business, this may entail being acquainted with population demographics, local sales data, or scouting an iconic site that will draw new clients and keep them coming back.
Avoid the mistake of trying to force the new market to ‘fit’ your tried-and-true business model, and instead build your business from the start to satisfy the specific needs of your new consumer base. This procedure may appear burdensome at first, but it will save you time and money by preventing the need to make major modifications later.
Including possibilities for continuous improvement in your business strategies can help keep your company nimble and flexible enough to pivot when necessary to prevent failure. Few people plan to fail, but many people fail to plan. Make sure you have enough funds and estimate conservatively with numerous scenarios so you can deal with the inevitable barriers.
Generally, there are four main types of market expansion options from which to choose:
The first thing to ask is, “If I’m going to expand, what makes the most logical sense for me from a cost position, as well as a profit and revenue one?”.
Create an action plan outlining how you intend to reach customers and gain a competitive advantage in the new market. Some corporations, for example, are relocating their call centres to emerging towns where real estate is more affordable and the city has the potential to become a future innovation hub.
Because of the unknowns that come with entering a new market, expanding your firm could be the scariest thing you’ve ever done as a business owner. Each market has a unique economy, culture, and government, all of which influence how well your firm performs in that market. Understanding the new market you are entering will allow you to design a localised strategy and business plan; just make sure it matches with the overarching strategy of the organisation.
Starting a business is an exciting, gratifying, but also difficult and tiring process, therefore having a fantastic team behind you is crucial. Diverse teams are frequently more resilient and have a broader collective skill set, allowing you to overcome hurdles and capitalise on unexpected possibilities.
Expansion into a new market necessitates efficient change management for all stakeholders, including employees, suppliers, shareholders, landlords, banks or investors, and, of course, customers. Implement processes that allow everyone’s feedback to be heard, and adjust or change your plans whenever a new perspective or piece of relevant information emerges.
Understanding your main stakeholders and how they will engage with your organisation is crucial because it allows you to capitalise on the advantages while mitigating the negatives.
Always remember that, while systems and slogans are important, it is individuals who make the difference.
Financial sustainability is crucial to corporate growth. Prepare to perform the necessary due diligence to ensure that your company is financially sound enough to make the transfer. Take proactive actions to ensure that you are following local corporate policies and procedures. Consider outsourcing accounting, payroll, and taxes, depending on your situation. Set attainable financial goals for your new location to guarantee maximum success.
Allow data to guide you, and make sure you understand your numbers. When can you expect to get a return on your investment in equipment? Do you have the cash flow to complete a large project if you take on a large client? Do you have a pipeline to keep people on the payroll if you hire them? You must be able to look around the corner and ready for disruption, especially in turbulent times.
You can set up surveys for emails or website pop-ups that allow customers to choose which products or services they wish to see from your firm next to establish the perception from your existing customer base. This might also assist you decide on a new market.
For example, using email lists, the marketing team creates surveys to send out to loyal consumers who complete them in exchange for website discounts. They offer a list of products, including home furnishings, and ask customers which ones they would like to see next. They decided to enter the home furnishings sector because the majority of their clients wanted to see a home furniture line.
The Ansoff Matrix, also called the Product/Market Expansion Grid, is one of the instruments available to you when wanting to expand your firm. It was developed in 1957 by mathematician and business manager Igor Ansoff to examine the risks and advantages of horizontal and vertical expansion. It is commonly depicted as four quadrants, and provides four possibilities and assigns risk to each of them.
for a great introduction to the Ansoff Matrix, complete with instances of where the risks have paid off (Aldi, Domino’s, Dyson, Starbucks China) and where they haven’t (Aldi, Domino’s, Dyson, Starbucks China) (Tesco USA, Friends Reunited, HMV).
Growing your business is a serious endeavour; yet, it is critical to enjoy the process and celebrate all of the tiny victories along the way. Team culture has a big impact on your company’s overall success, so don’t overlook the importance of recognising the efforts of your employees and colleagues.
Business marketplaces are constantly changing, but with proper planning, the right team, and an agile mentality, you can differentiate your company, develop your present market, and become a market leader in a new one.