How do you plan a business expansion?
You should always be pushing business growth. Yet, there is more than one type of business expansion. How do you successfully plan the next phase for your business?
Here’s what to consider, the steps to take, and what you will need for your next business expansion plan.
Always Be Expanding
A lot of critics of hyper growth have emerged in recent years. Not everyone is a fan of the now status quo grow at all costs strategy that seems to be the only thing many startup entrepreneurs and VCs know.
It can have its risks. Though it has also proven to be the silver bullet to success for some really big and famous companies. It is seen as essential to make some ventures work. Though it has also become the achilles heel of other companies, like WeWork.
Other founders have taken a more traditional route to business growth. Instead of growing at all costs, they’ve taken more of a bootstrapped approach. Letting sales and profits pay for their continued expansion. Some say this strategy is equally risky and far too slow. It isn’t always very attractive to US based investment firms either.
Whichever path you choose, your business does always need to be expanding. This is one of the key pieces of advice and guidance that any good startup accelerator would provide.
In business it is a matter of grow or die. You can;t just tread water forever. If you want to survive you have to keep swimming. Otherwise you won’t have the ability to thrive.
This can also have many ripple effects throughout your business. It can play a role in customer retention, and being able to recruit and keep the best talent. Investors have very clear growth and traction expectations too. Your ability to keep your own job in your own company may even be at stake.
So, how do you do it?
Types Of Business Expansion
There are actually a variety of types of business growth, different ways to expand, and methods to execute on these concepts.
Much of this may depend on your individual business, the current landscape, resources, appetite for risk versus sustainability, and the specific metrics you are trying to grow on.
Here are just some of the ways to grow and expand your business.
Increasing Market Share
Perhaps you are still a young startup which has started off in a tight niche, testing the waters. You’ve got it working. You’ve found product market fit. The feedback is great and your model is ready to be expanded.
The next logical step can be to grab more local market share. Or more of a share of your target market and industry.
This is largely about expanding how many customers you have. Which may often rely on how much you make your services and product available. Or it can be about competitiveness and drawing customers from existing local competitors. Like a gym or coffee shop.
Expanding To New Markets
If you are already capturing a significant share of your local or current markets, and those are on the right track to keep growing already, then the next logical step for expanding your business may simply be about moving into more markets.
Perhaps you started out in your own home town, and you are hitting your potential as fast as it makes sense. To multiple your results, you may just need to move to a new town, and the next to gain more customers. Like McDonalds or Walmart and Starbucks do.
These leaps can also obviously be even larger in geography. They can be regional, state, national and international.
Diversifying what you offer can sometimes be more efficient and come with a better risk to reward balance for your startup, depending on your type of business.
This can be diversification of products and services or customers.
For example, how Facebook began with a very specific tool for ranking people on campus by college students at one university. Then not only geographically expanded to new schools in new states, but opened up to the general public with all types of use cases.
Or in the case of Amazon, they began with books, and have now expanded to all types of consumer products, grocery stores and real estate.
Then there is Zillow, which started out with a very notoriously flawed home valuation tool, and has since diversified into advertising, home listings, rental property management, mortgage lending and buying and selling homes themselves.
Evolving Your Business
In some cases, significant business expansion can rely on substantially changing your business and business model, and rethinking your entire company. For example, you might start off designing and selling a solar car direct to consumers, and then realize the scale is going to come from a solar plant, and generating the energy and selling it to cities and the technology to other automakers.
Improving Internal Metrics
If your desired growth is in revenues and profits and not necessarily just sales and customer acquisition counts, then improving internal metrics may be the place to start. In fact, it can be a smart place to start before any other type of expansion is considered.
Through systemization and automation you may be able to greatly improve the efficiency of your business. You can speed things up, provide better service, handle more customers, create more, get more out of your budgets, and be more profitable with the same headcount and resources.
Another way to do this is to expand your business into different parts of the supply chain. Walmart is the most classic example of this. They begin with offering products from third party brands. When they prove popular and profitable, they begin offering their own competing Great Value brand of that item. Then they completely remove that third party product from their shelves and leave customers only their ‘Great Value’ option.
So, if you are wholesaling, you can expand to taking over the front line of sales and customer service and have retail branches. Or go from selling on third party platforms to your own online assets.
Or you may expand the other direction and begin doing your own manufacturing and shipping, and drive down costs, achieve more control over everything, and grow profitability that way.
Ready to expand your business? There are many ways to expand and grow. Decide which are the right goals and methods for you. Create a plan for it that encompasses everything you’ll need to make it happen and ensure your success using these tips, and put it into action.