Expansion into new markets or geographies can be challenging, but it’s not impossible. It’s worth the risk if your organization is ready to take it and you have a good plan. Expanding your business might sound scary: You must invest time and money to develop a new product or service, analyze your competitors and find potential partners. However, with the proper preparation, expansion can also be rewarding for your business. If you are considering growing your company outside of your home market, these are some things you need to consider first.
Define Your Expansion Strategy
An expansion strategy is a plan for reaching new customers or markets. It helps define how and why your business will grow. Before you get started, ask yourself: Why are you expanding? What do you hope to accomplish with your expansion? How will it help your company to grow? You also need to decide how you want to expand. Will you expand organically (growing through your own resources) or through acquisition (buying another company)? Expert legal advice from commercial lawyers such as Manfred Sternberg & Associates can be beneficial here.
Determine Your Entry Point and Target Market
Deciding if your company is ready to expand and where to start is one of the first steps of the expansion process. The first question is: What are the opportunities to grow your business? There are a few options:
- Entering a new market or geography: This could be across the street, state, or even the globe.
- Entering a new industry: You could diversify your services and offer something outside the core business.
- Entering a new channel: This expands the way you reach customers.
- Expanding the customer base: Your core customers are ready to buy more.
Once you’ve decided where to expand, you must determine the best market or geography to enter. Start by asking yourself: Who are my customers? What are their needs and wants? How do they currently solve those needs? These questions will help you identify your target market: the specific segment of customers you want to sell to.
Analyze The Competition and Consumer Behaviour
Competition is always significant to consider when expanding into a new market. Once you’ve determined the best entry point for your expansion, the next step is to analyze the competition in your new market.
- What are the competitive advantages of your competitors?
- What are the strengths and weaknesses of your competitors?
- What is the customer needs that your competitors are fulfilling?
Remember that potential customers might not even know they need your product or service. That’s why it’s important to research consumer behavior. What is your target customer’s daily life like? What are their biggest challenges? What are they looking to solve? What are their pain points?
Define New Product Requirements
Before entering a new market, you must clearly understand what you plan to offer your customers. What are the benefits of your product or service? What are the features and qualities of your product or service? How does your product or service solve a problem or make life easier for your customer? Once you’ve decided what type of product or service to offer, you need to ensure that it meets your new market’s needs. What are the regulations and compliance requirements in this new market? Can your product be built or manufactured in this market?
Organizational Mapping and Culture Analysis
Now that you’ve decided what to expand, where, and what to expand with, it’s time to look at your business’s organizational structure and culture. Map out the strengths and weaknesses of each department and decide how they will work together during the growth. Although it might be tempting to jump right into hiring new employees and finding partners, you must ensure that your internal organization is prepared for the expansion.
Expansion is a big undertaking, and every business owner should consider it carefully before jumping in. It can be both exciting and terrifying at the same time. If you’re gearing up for expansion, ensure you’ve done your homework and have a clear plan. Start with these checklist items, and cross them off as you go along.