Conduct Helpful Market Research
Most big businesses have carved out their own corner of the market. Pepsi, for instance, was losing to Coca-Cola in the soft drinks market until it segmented the market and started focusing on a young, fun-loving demographic. Today many Pepsi ads targeting that demographic feature pop stars and other young status symbols, a strategy that has helped it grow into a heavyweight cola company. Similarly, Red Bull gets its energy drinks in front of a young, adventurous crowd – its own segment of the market – and even owns a Formula One racing team.
Segment your Market for Growth
You can also grow and expand your business by carving out a new corner of the market. Research your market to identify a viable segment of consumers you can target by searching the Internet and even checking with the local chamber of commerce. Narrow down who your main competitors are, who they are serving, what they are offering and areas that are underserved. This way you will be able to eliminate part of the larger market and carve out a corner of the market for yourself that you can focus on and grow your business.
Develop a Solid Marketing Plan
Expanding a small business usually requires substantial investment of time and money, which is why it’s vital to develop a marketing plan beforehand. A marketing plan will ensure you are not only sticking to your expansion schedules, but also spending your marketing resources wisely and appropriately.
Typically, a good marketing plan will outline everything from understanding your target market to understanding your competitive position in that market and how you intend to reach that market, as well as the costs of how you are going to achieve your expansion goals within a certain timeframe.
Check out these templates that small businesses can use to develop solid marketing plans and for more small business expansion tips.
Money for Small Business Expansion
Seek Financing for Your Expansion Efforts
Analyze your financial situation to see if you have adequate funds to start your expansion efforts, and also to support ongoing expansion expenditure, such as the cost of maintaining new employees. Apply for financing from the U.S. Small Business Administration (SBA) if you need any financial assistance. SBA is committed to helping small businesses thrive and has developed a number of financial programs that address the various needs of small businesses.
Other options you have to get a small business loan to support your expansion goals include credit unions, banks and alternative online lenders, such as OnDeck and National Funding that offer working capital loans, specialized lenders like Kabbage that works with online retailers, and marketplace lenders like Biz2Credit. Remember your marketing budget is an integral part of you overall grow efforts so avoid making common rookie small business loan mistakes.
Diversify Your Product and/or Service Offerings
Tweak your existing product or service so that it appeals to the new group of consumers or users you have identified. Alternatively, add a new product or service and start selling it to them. This way you will open up new territory and expand your business in a new direction. By diversifying, you will also protect your existing customer base and create multiple income streams that can often fill seasonal lows and, of course, increase sales and profit margins.
Common ways businesses diversify include importing or exporting their own or other people’s products, selling complementary services or starting consulting services. Chartered Professional Accountants, for example, could start consulting or offering financial planning services for business executives. You may also need to open another location to serve your new (and existing) market better.
Partner with Others and Get Help for Expansion
Align Yourself with Other Brands and Businesses
An alliance with other brands can help your business expand faster. For example, let’s say your company manufactures new tech golf balls that offer great control on the greens, but you don’t have a manufacturing facility, a distribution channel or any of the other parts of the golf ball supply chain. You can survive alone, but you will only really thrive when you plug into the community around you.
In this case, you can reach out to a local branch of an established golf ball company like Bridgestone or other specialty ball manufacturer that has excellent client acquisition, distribution or marketing channels and partner with them to tap into their golf ball supply chain. You’ll need to pay your partners a portion of the profit every time you sell your golf balls, but you’ll build your own brand recognition and affinity in the process. It’s about strengths and weaknesses.
Use New Technology to Stay Competitive
Technological changes can either help your business grow or hurt your expansion goals. For example, upgrading your business facility with advanced technologies can increase your efficiency and also expand your operations. However, being the last in your industry to sense where things are going with technology, say you are the last to adopt modern accounting software, can erode your base.
So, try to keep up with the latest technology and decide on which types of technology are right for your business. Don’t forget to devote part of your business to meeting the needs of the “early adopters.”
Engage Consumers, Get Additional Direction and Guidance
Network on Social Media to Build Brand Recognition
Social media can be an invaluable tool for engaging with consumers and expanding your brand recognition. For example, a web design company can engage with its users by responding to their tweets, and fans that follow the company on Twitter can see the tweets. If the tweets are interesting and helpful, other people will follow the company thereby growing its fan base.
Similarly, small businesses can post videos of satisfied customers on YouTube and Periscope, tag them with searchable keywords and link the videos to their business websites. You can also post company events, new product lines, specials offers and promotions on Facebook and other social networks.
Merge With or Acquire Other Businesses in Your Market
Perhaps the most aggressive growth and expansion strategy is to buy a company that makes products related to yours. We’ve seen that a lot lately with tech companies like Facebook, Google and Amazon that continue to acquire smaller businesses. Vonage, a long-familiar brand in VoIP services, has also been on an acquisition campaign that has helped it expand into the Unified Communications-as-a-service (UCaaS) market, position itself as a leader in the market and increase its profit margins. If you cannot acquire another business, perhaps you can arrange to merge with it. If you swing it, this can be a very smart move.
However, it is important that you observe due diligence and consult with stakeholders, mentors, business associations and other available sources like books and magazines before merging or acquiring a business. That will help you get vital direction and guidance before you proceed.