As coronavirus continues to take its toll on the US and across the globe, most businesses remain focused solely on survival rather than medium or even short-term growth.
We’ve now seen more than 2 million cases reported at the time of writing, while the situation may well worsen before it begins to improve.
However, some companies and marketplaces have been more fortunate than others, and this means that a select few businesses may be in a position to boost their income and profitability in line with shifting consumer demands.
If you are going to expand your business in a successful and sustainable manner, however, it’s important that you go about this in the right way. There are also some universal rules that you’ll need to keep in mind, including the following:
Create a Focused Plan for Your Expansion
Let’s face facts; there are numerous ways in which you can expand your business, from developing new and diverse product ranges to targeting international markets.
You should not consider attempting all of these measures at once, however, and it’s important to create a focused expansion plan that enables you to both manage your costs and achieve the best possible return on your investment.
This type of approach also enables you to focus on the finer details of your plan, making it far easier to develop a viable strategy that can be applied in the face of real market conditions.
For example, let’s say that you’re looking to expand internationally, with your first goal being to target a relevant and accessible market that can benefit your business. From here, you’ll need to estimate the practical requirements and cost implications of cracking this market, depending on the precise nature of your venture.
Product-oriented firms will have to focus on international shipping laws and building a network of viable couriers while considering the impact of scaling up their manufacturing on production costs.
Conversely, service-driven firms may need to undertake more stringent market research pertaining to the precise level of demand that exists for their offering. They should also consider any legal ramifications associated with selling their service in a specific international market, to ensure that they operate compliantly.
With these considerations in mind, it’s far easier to make informed decisions regarding future growth and ultimately expand in a safe and scalable manner.
Penetrate Deeper Into your Consumer Base
It’s a well-known fact that it costs approximately five times more to acquire new customers than retain existing ones, and this should definitely be borne in mind when expanding your business venture.
It would certainly be wise to focus on expansion strategies that are targeted at your existing customer base, with one of the best examples being to penetrate deeper into this demographic by selling a higher volume of core products and upselling wherever possible.
This can definitely reduce the overall cost of expansion, as you can simply perform a market segmentation analysis to identify key customer groups and target these with tailored product releases.
Successful and targeted upselling is arguably the best pay to penetrate into an existing consumer base, as it allows you to increase the value of individual customers and boost profitability accordingly.
This type of approach can also inform your spending and improve efficiency, driving down manufacturing, marketing and sales costs down in the process.
Consider Mergers and Acquisitions
Depending on the precise nature of your business, you may also want to consider engaging in a merger or acquisition as a way of successfully expanding the venture.
This is certainly the fastest route to expansion, particularly in lucrative and high-growth markets such as technology.
The cumulative value of tech acquisitions and mergers is also expected to rise this year, although the strategies undertaken by companies may vary as the world’s socio-economic landscape continues to shift dramatically.
This type of expansion can also grow your sales and boost revenue exponentially, while significantly increasing the value of your company shares.
However, the key is to perform due diligence as an entrepreneur, both in terms of any targeted merger or acquisition candidate and the level of investment required.
In terms of the latter, this must be offset by reliable revenue and profit projections, so that your investment can deliver a return over a predetermined period of time.
It’s also important to structure a deal that’s mutually-beneficial, and this may require you to collaborate closely with legal experts before closing the transaction.
Most importantly, you’ll need to allow a long enough period of time to complete a merger or acquisition comfortably, as rushing the deal can cause corners to be cut and buyers to pay over the odds in some cases.
The Last Word
Expanding your venture is never straightforward, even in a strong economic climate that’s embarked on an upward curve.
There are also numerous considerations that can impact on your plans, many of which are exclusive to specific companies or industries.
The advice listed in this article is universal to most types of business, however, and it’s important that you bear these in mind before pressing ahead with your plans.
Remember, the ultimate objective when expanding your business is to create a more profitable venture, and the cost of growth should never outweigh the boost to your bottom line.