Have you found your company in a healthy financial situation, with a growing clientele, and a positive return on your business investments? Have you considered expanding your business, and you're not sure where to start?
Once you have hit a certain level of success with your business, you may start considering the benefits of expanding into new markets. The expansion means more products or services, sales, and income for your company. By expanding your business, you can:
Attract new customers
Gain access to economic need and scaling
When your business grows, vendors and suppliers are incentivized to provide you with discounts when ordering larger quantities. Basically, you pay less to get more supplies and products.
Establish multiple revenue streams
Expansion usually gives you the opportunity to offer a diverse range of products and services. Diversify your revenue stream by selling different products or services.
Expanding your business is a big commitment, but one you will be proud of. Before you rush into expanding your business, make sure your company is actually ready for growth. Your recent business success is not the only thing that should be analyzed.
Are you adding new products or services?
Figure out which products and services your customers want, and more importantly, how much they will pay for them. Then, figure out if you can sell your products or services at a profit by conducting market research. Ask your customers what they think about your business ideas, including potential pricing. Market research needs to focus on your customer's demands for new products and services and your overall costs (manufacturing, delivery, manpower, etc./) and sell.
Are your existing customers loyal? Do your existing customers want you to expand?
To expand, you must have regular customers. Your company should have a steady and growing customer base. Having a regular flow of customers shows that there is a continued demand for your products and services. Repeat customers are the best customers to have. They prove that your company offers satisfactory products and services. Not to mention, the recurring revenue from these customers helps with your business's financial stability.
If your customers keep asking you to grow, then it may be time. If they want more products or services or hours, it may be time to meet your customer's demands. Always take note of what customers ask for, and track the patterns of the requests.
Do you have a consistent increase in sales?
Have you seen your current client base consistently buying more of your products/services? Before you decide to expand, perform a market segmentation analysis to identify which clients are most likely to buy what, so you can focus your marketing efforts on these segments/groups.
How does the analysis work? It will divide your clients into segments/groups based on the criteria you choose (gender, buying history, age, location, ethnicity, etc./), so you can analyze potential profitability selling your existing clients new products and services. This analysis can also help you figure out your business's future marketing budget.
Do you want to expand into a new territory?
Do you think you can sell your products and services to new customers? Do you think you can sustain business in another location? If you decide to open a new location in a different geographic region, you will be required to invest a significant amount of money and time. Make sure the expansion location is justified.
You'll need to determine how to specialize your advertising for your new spot and how to share the benefits of your products or services to those who live in the new region. Share your strengths, be honest about your flaws, and customize your message for that territory.
Do you want to target a new customer market?
Are you looking to expand your customer base? You can target sales and marketing efforts to specific customer groups based on demographics, such as age, gender, location, interests, values, and activities. Also, ramp up your targeted advertising if you're going to expand to a new demographic to make sure you properly connect.
Do you have too much business?
If you find that you are bringing in more business than you can handle, it may be time to expand. You may need more manpower or space. Expanding your business can help manage your demand and even bring in more customers. By expanding this way, you show a commitment to your employees and an understanding that the workload they have been assigned and you are trying to lift off some of the stress of a growing business.
Are you considering selling your products and services online?
You can not only reinvent your company through your website, but you can sell your products. Whether a client is booking a service or buying your product, your website can help you expand further than a storefront's potential. Advertise online using search engine optimization (SEO/) to rank highly on internet searches.
Are you considering buying or merging with another business?
Buying or merging with another business is the fastest route to growth and expansion if performed correctly. Acquiring or merging with another business can double the size of your business instantly, growing sales and revenue.
Your due diligence is required and should focus on the company's financial condition, client-base, strength and depth of management teams, and the stability of their existing contracts. If you're looking for a company to acquire, look for synergies between your business and theirs. Combining forces can make a business stronger than ever.
Is your industry expanding?
If your industry is growing, it will be easy to expand. Check your industry's trends to find out if your market is on the rise and if/when it's targeted to be on the rise. If you find your industry is stagnant or on the decline, you may not want to expand. You have a higher chance of losing money in the end.
However, if your company is in an industry without growth, you may want to consider expanding your offerings. What is future proof in your industry?
Looking to Expand Your Business?
If you find yourself needing to find funding for your business's expansion, First Union Lending is here to help.
We have nine different business loan types to choose from. This means that we're uniquely qualified to help you find the perfect loan to open your small business.
Applying for a business loan doesn't affect your credit. Better yet, your business loan may be approved as soon as the same day.
To discuss our business loans with one of our lending experts, click here or call 863-825-5626. We'll talk about our various business loans and help you find the right one for your business expansion.
Get started with the process now by learning more about our business loan types here.