From business loans to mergers, Cheryl examines the ways in which you can increase your business and your turnover, looking at how you can mitigate some of the risks involved and make the most of your connections.
Having written an article on winding up your business a few months back, I now feel that it is important that I look at the opposite side of business. So the big question is, how can you effectively expand your business?
There are many different things that can help to expand a small business, so here I am going to give you just a few points to give you food for thought.
The first area I would like to cover is market research. This is something that should be done prior to establishing the business. Once the business is up and running, it is important to conduct market research on a regular basis to ensure that you are keeping up with the competition, and also to ensure that you are providing the consumer with the products and services that they want. It is important that the product you are selling is marketable within its targeted demographic.
Cornering the market
Another way of growing your business is to target a new corner of the market. Again, research plays a key part in this; before you can launch anything new, you need to ensure that you are going to be able to see your item succeed in its current market. Your research should include the local area as well as the internet. You perhaps also need to test the water with your local Chamber of Commerce before thinking of launching your new product, depending on how commercially sensitive your idea or product may be.
In order to expand your business it is important to narrow down who your main competitors are, what they are offering and at what price. Once you have done this, you need to ensure that you can successfully target the market in question to ensure that your products or services are successful.
In order to develop your small business effectively you need investment, both in terms of your time as well as your money. To ensure that this investment is in the correct areas, it is essential to establish a good marketing plan, strategies and even contingencies to ensure that you achieve your expansions goals. This will enable you to deploy your resources in the correct areas, as well as ensure that you are spending your marketing resources correctly.
A good plan will ensure that you have covered everything to aid the expansion of your business. It will help you to understand your target market as well as where you stand in relation to the competition. The final thing that should be covered in your battleplan is how you are going to reach your intended market. You will also need to detail how much it is going to cost at each stage in order to reach your expansion goals. There are plenty of aids on the internet to help you devise your marketing plan.
Budgeting and expenditure
Before you can engage in business expansion you need to ensure that you have the required finances in place. As a small business owner, you need to begin your expansion with a financial analysis. A financial analysis will allow you to be clear as to whether you are in a suitable financial position to press ahead with your expansion plans.
Expanding your business may incur extra expense such as new employees, additional buildings or premises, advertising and production of your product: all of which eat into your overall turnover. In order to ensure that you have the relevant necessary finances, you can apply for small business loans or find independent investors who may become silent partners. When securing any finance, ensure that you secure enough money to cover all expansion expenses. This will prevent you requiring further financial assistance down the line.
When expanding your current business it is important to ensure that your new product or services appeal to a new set of clientele. You must make sure that it appeals to the consumers. An alternative to targeting a new set of clients is to market and produce new products for your existing target market. This may allow your business not only to expand, but to move in a different direction.
Some common ways of expanding your business could be to start selling on the internet through your own website or via a website such as EBay. You may also have the option of offering your product to other local businesses, becoming a ‘supplier’ to those businesses.
Another way of expanding your business could be to team up with other brands who have larger manufacturing facilities. This will increase the production of your product, enhance the sales of your product while also expanding your business. As a small business you can survive on your own…should the opportunity arise for you to tap into the surrounding community, then this is advisable. Association with other similar businesses within the local community can improve the chances of success for your own expansion plans. Partnerships with other businesses will mean that you might need to pay them a percentage of your earnings, but is worth doing in order to secure your business expansion.
The internet and social media
Gone are the days of relying on reputation and word of mouth in order to promote your business. In this digital age, it is important to keep up with technological advances. Technology is not only important when it comes to business promotion, it is also highly relevant in terms of business maintenance such as book-keeping and communication. Email, internet banking and social media are vital for the success of small businesses – therefore it is important to ensure you keep up with all the advances in software and technology to ensure that your expansion is successful.
We have briefly touched on the role of social media; now let’s look at it in more detail. Social media can be an invaluable tool for engaging with consumers and selling your brand. Social media such as Twitter and Facebook give users the option to elicit responses to advertisements, and create content such as pages that can be actively followed by consumers. Another way to ensure that your product is reaching its target group.
Consolidate your position
So far we have looked at advertising and promotion of products in terms of expanding a business. But what can be done once the business expansion has been successful? What can the company do in order to hold the competition in check?
The final part of successful expansion could be for you to merge with another company that offers a similar service or product. If they refuse a merger, then your other option is to buy them out. This is probably the most aggressive strategy that can be used by a company in order to guarantee business expansion. It allows you to guarantee that you are hitting your target audience as you become the main provider of the service or product.
Before this can be done there are processes that needs to be followed. There must be a process of due diligence first and foremost, then followed by consultation with stakeholders, mentors and business associates. Once this process has been completed, and you are sure that it can be done safely without any excessive overheads, then the takeover or merger of the two businesses can proceed.
With a successful business what else can you do to ensure that income continues? If you have a successful product, in some instances, you can license your product. Licensing your product is an effective way of growing your business, especially if you have a service or branded product. Once you have licensed your product, you will receive monies up front from anyone who wants to use your product or royalties from anyone who continues to sell your product. The software industry was built on this principle form of customer capture.
Business recognition is a sure way of growing your business, none more so than recognition by the government. If your business is a recognised government business, it immediately enhances the business’ reputation and credibility. The government may also have contacts in other countries who may be interested in your product or service.
So, once your business is established, there are a number of things that you can do to increase its footprint in the industry or area that it operates in. A number of businesses fail when doing so, mostly as a result of what is known colloquially as PPP (P*** Poor Planning). It’s a well and good to boldly forge on with confidence, it’s another to look before you leap. Business is like that – sometimes the risk involved in expansion is worth it, and sometimes it can kill your company and leave you in dire straits if you are not careful.
Before you start, think long and hard onto a piece of paper, and write down the pros and cons of expanding your business. Talk to valued friends and loyal customers to determine your chances of success. Then, if you believe you can make that all important leap, go for it. Sometimes, the biggest rewards are the hardest to achieve – and when you do make it, you could have the whole world in your hands.