Key Strategies for Business Expansion and Growth

Are you stable enough to expand your business?

Have you done self-analysis before considering expansion?

Is your business running smoothly and showing an increased profit margin for several consecutive months?

Then it is time to think about growth by using many strategies. At some point, while running a business, you must consider expanding to sustain your business success and your financial well-being. If you fail to grow by adopting the wrong strategy, you might risk your investments, which results in huge capital loss.

Expansion in business means

Business expansion is a strategy almost all companies use to continue growing their business. It is a crucial phase of a business’s life, and the owner should know what type of business expansion he wants and how he can maximize his chances of succeeding. Before initiating any business expansion program, an owner must formulate a sound business plan with detailed market research on the market trends or the most demanding product.

The estimated cost of growing a business depends mainly on the type of business you are operating or the scope of expansion in your industry. If there are no growth opportunities in the industry, you probably don’t need to expand in that direction to business failure. 

When to consider expansion

Making the right decision and seizing the opportunity at the right time is vital to run a business in the long run. The decision to grow a business can’t be made in the blink of an eye. It should involve thorough business analysis, careful planning, available financial resources, and analyzing the risk factor. A business owner needs to seek guidance from financial experts and operation planners before making any decision regarding what type of expansion would be best with available resources.

Rapid expansion in business is also dangerous, as it weakens the company’s finances, puts pressure on its resources, and declines the quality of its products or services, and that’s how customer loyalty is lost. Business owners, either small or big, have to review several factors and research the pros and cons before implementing a plan. It’s the best time to expand the business if:

• The demand for your product or service is rising steadily with increased profitability.
• You have a large loyal customer base. Loyal customers are an asset to any business. Their loyalty towards your brand keeps your revenue stream consistent because they might have referred to your product or service by word-of-mouth. 
• You analyze that people are asking for your products or services, you feel short or balanced on your supply, and often people travel from far away areas to purchase from your shop. 
• Your industry is growing, and it shows more public interest in your product or service, providing you with more growth chances.
• You have enough capital in your business account, or your business’s net income is more than its expenditures.
• You have more workload with a limited workspace. 

Strategies to expand a business

There are many business growth strategies to expand your business on a large scale. Some of them are here:

Optimize segmentation in the existing market 

It means selling more to your existing customers. You can expand your business through market segmentation by analyzing the customer’s age, gender, size, preferences, eating habits, or buying history. For example, if you’re running a boutique and sell garments for females, you can expand to children’s or men’s segments. This strategy helps a small firm to compete side-by-side with a large firm by maximizing per-unit profits and per-segment sales.

Use a Diversification Approach

A Diversification strategy means adding a new product or service to your existing products or services. A new product might be related or unrelated to your current products. A Diversified portfolio is a practice of expanding business by increasing sales associated with an existing product line. 

For example, a soap manufacturing firm can launch a new variation in soap, like anti-bacterial soap or a liquid hand wash. It can either launch a shampoo from its brand to expand its business.

Promote by a new offer or discount

Expanding a business is not always related to your products or services. Sometimes, adding new offers and discount deals to existing products or services may help to generate more revenue in a business. And more revenue means more business’s net worth. You can expand its workspace or increase productivity by hiring more employees.

Expansion into new markets or expanding internationally

Many companies use new market expansion policies to sell their existing products or services to new customers. While expansion your business in the international market is a challenging step. It can be beneficial in terms of brand recognition internationally and create opportunities for future success. 

Before entering a new market, analyzing start-up costs and the number of employees is a must action. 

Launch an E-commerce platform

Your online business availability is a great way to extend your market reach. Set up a website using an E-commerce platform and use SEO tools with digital advertising to attract more customers from your physical location. You can also create your Google my Business or an app on the Google app store so they can directly approach you. 

Use a Market Penetration strategy

Businesses use extensive marketing efforts to increase market share for current services or goods in existing markets. Organizations increase their advertising expenditures, offer sales promotion items, increase publicity efforts, use appealing tag lines to build a loyal customer base, and generate more revenue for their business. It is the least risky strategy to expand your business.

For example, Coca-Cola uses a market penetration strategy as its primary growth strategy. Then the company diversifies its product range by launching new products, such as Diet Coke & Coca-Cola Zero. This strategy has helped the company to build a loyal customer base and increases its market share. Then the company expanded internationally. 

Partnerships with other businesses

Partnership with other businesses is also an expansion strategy to enter the current market with a new market segment and earn mutual profits. The partner’s product or service should complement your product or service.

For example, Casper is an online mattress and bedding brand, and it partners with West Elm, a top-notch furniture company. Both businesses earn mutual profit through co-branding partnerships. There are more examples, such as BMW & Louis Vuitton, Nike & Apple, UNICEF & Target, etc.

Start a Franchise

Many companies expand their businesses through franchising. A franchisor is the brand owner who authorizes licenses to the franchisee. He allows some or all of its rights, such as trademark, brand name, or use of its business model. In return, the franchisee pays some fees to do business under the franchisor’s name and system finalized in the franchising agreement.

By franchising a business brand name enters a new market without requiring investments, the franchisee pays about 5% to 9% of its total gross sales and generates a revenue stream for the business owner.

Acquire a new business

When a business takes over a new company and absorbs all its resources (its products/services, staff, departments, and revenue), it is called a business acquisition. Businesses acquire new companies to expand in foreign markets, grab the intellectual property of the targeted company, accelerate growth, and overcome competition.

For example, the Walt Disney Company acquired Pixar (advanced animation technology expert) in 2006, and the same company, acquired Marvel Entertainment in 2009. From both resources, Disney has made a fortune and is still growing.

Conclusion

The purpose of any business is to seek growth and thrive by making exceptional efforts to achieve its goals. The size of the company does not matter. The thing that matter is the key to making timely strategic decisions and snatching the market share from competitors. Think big and start with small milestones. If you want to expand your business, consider less risky strategies in the first place, increase your loyal customer base, gain market share and then invest in new markets or new products or services. Plan well for great success!