When opening a small business venture most owners hope to grow their company someday but when that day comes, the business expansion can cause a great deal of confusion. If you are planning to expand your business, either within your same market or to a whole new area of the world, there are steps you can take to make the transition smooth and relatively stress-free.
Begin with a carefully laid plan and then follow it as closely as you can to ensure that everything is in order before you open the doors at your new location.
#1. Define Exactly Why You Are Expanding
One of the most important steps to take when planning a business expansion is to define exactly why you want or need to expand. It could be a greater demand for your products or services and it could be that you are doing so well you would like to expand into a new market in a new location. This step will impact other steps in your business expansion plan so take time to do a thorough explanation, in writing, as to the purpose of your expansion.
#2. Research and Analyze Your New Location
You may want to expand into a new market for any number of reasons, some of which may be personal such as climate or standard of living, however this may not be the ideal location for your particular industry. Before going any further it is vital to research that particular market as it relates to your business. Are other businesses doing well in that region? Is there a call for what you have to offer? What is the economy like there? These are just a few of the questions you will need to answer along with the average cost of commercial rents if that is your intention and the cost per unit for your utilities. All of these things should factor into your decision as to where you will be opening a new location.
#3. Local Laws and Regulations
No matter where you plan to open a new location there will be laws and local regulations that you need to abide by. If you are only going to start a new location within your current market area, this probably won’t be an issue.
However, in recent years many businesses have been expanding overseas to new markets and as a result, international laws and regulations may be a problem. Before setting your goal as opening a branch in some global market that appeals to you, make sure your expansion also appeals to the local government as well.
#4. Write a Business Expansion Plan
As mentioned above, a well formulated business expansion plan is going to be necessary before moving ahead with your plans. You will need to detail to the local authorities just what it is you intend to do within their jurisdiction and you will definitely need a business plan before approaching a lender for funds. Also, if you are entering a foreign market you will need to satisfy the local government that you will be following their rules and regulations.
They will want to thoroughly assess your business plan to ensure that your company is a good ‘fit.’ While lenders and regulators are not the only entities that may wish to review your plan, it is a good idea to have it handy to follow as you progress and for the inspection of any official who may want to review it.
#5. Raising Funds for Business Expansion
Once you have determined exactly where you are going, it’s time to look at how much this new endeavor is going to cost you. If you need to raise funds for business expansion you will certainly want to research a variety of options. Funding business expansion within the United States would certainly be easier than borrowing funds for an overseas venture, however, that can be done as well. Compare interest rates and loan terms among an assortment of lenders before choosing which one to borrow money from. Don’t forget to read some customer reviews to see how high their customer satisfaction rating is and before signing anything whatsoever, read the fine print.
#6. Recruiting Local Staff
Most often you will want to take key members of your staff along with you when setting up in a new location. However, you will also want to hire locals in your new location. It is unrealistic to think you can take a whole crew with you for the duration but it is a good idea to take as many team leaders as possible to train new staff as you get off the ground.
If finances are a problem it has been suggested that you hire part time employees in the beginning because this eliminates the need for benefits packages when finances are low. As business picks up at your new location you can then begin offering a benefits package to each employee as you move him or her to full time hours but in the meantime, keeping payroll as low as possible can help you start realizing a profit much quicker than if you had a sky-high payroll.
#7. Network with Local Business Peers
This particular step is crucial if you are entering a total new market and especially critical if you are expanding overseas. Customs may be different, there may be a language barrier and to put it bluntly, it may be hard to break into their version of the ‘good old boy’ system.
Network with as many other business professionals as you possibly can within your new market. You will find that this may bring you tons of leads and contacts that you wouldn’t have had otherwise. Take the time to attend local events and make the rounds, introducing yourself to any business owner or director who could directly impact your business. Playing politics never hurts when expanding to a new market.
These 7 steps should help you expand your business almost seamlessly with just a little effort. Remember that each new market will come with its own set of strengths and obstacles so be ready for all those eventualities with a little extra planning. Most importantly, keep your business plan at hand and never lose sight of your vision. The move may be difficult at first but when you finally move from red to black you will be glad you had a plan in hand.
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