Business Expansion and the Best Time to Think About it
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It’s not easy to expand any business and there can be several challenges while doing so. Whether you are opening a new store, outlet, taking on new clients or looking at any other ways to grow your products or services, there is going to be some pressure. But expansion is also the next logical step when you feel like you have already achieved what you had aimed for in your current position. It is the time for you to take on new things.
Any expansion plan requires proper planning. If you decide to jump headfirst into expanding without thoroughly considering how you go about it, chances are it may cause more harm to your business. There are so many different aspects of the expansion. It could mean opening a new location, or moving into a bigger one, or even hiring your very first employee.
But there are a lot of parameters to consider before you actually think about expanding your business. Here are a few crucial steps before thinking of expansion:
1. Get your product ready for the market:
The first step to business expansion is getting your product properly ready to face the market. Before you think of expansion, make sure your current product line is solid. It is very essential to have a strong foundation before you expand. To understand whether it is a good idea to consider adding new products or services, ask yourself if your current product is well established. Are your customers satisfied with your product? Is the demand for your main product growing? You can get better ideas about your product by researching the latest trends in the industry, paying attention to what customers and prospects are talking about, and holding focus groups or conducting customer surveys.
2. Give a careful thought to the pricing
Before considering expansion, it is very essential to think about the pricing of your products. Many entrepreneurs think they can be successful by offering low prices. But that need not always be the case. Pricing is at the core of every business. It affects everything you do and all the business decisions you take. Supply and demand are key factors behind pricing and successful entrepreneurs can manipulate demand by making their products more desirable. You must remember that the right price range should fall between your cost and the value you offer to customers. Your prices should be closer to the value of what you are selling. To decide upon prices you must take into consideration several factors like the needs of customers, the value you offer, competitive strengths and weaknesses etc.
3. Get the product ready for partners
The third step is to make sure the product is ready for franchisee or partners or whoever you are expanding with. For many business owners, franchising can look like an ideal option for business expansion because they are responsible for the investment in opening locations. For franchising a business, the business model must first be proven and be attractive to potential franchisees. A new franchisor will need capital to develop infrastructure including documents, manuals, training programs and marketing as well as a marketing budget for a lead generation. In case you are planning to partner with someone, even then you have to ensure that your product is ready. If there is no franchise or partner and you are planning to put in your own capital, you still have to justify the additional investment and hence need a proper product and plan.
4. Ensure that your product is universal
If you are planning to expand, it is important that your product is strong enough to suit the needs of any market it goes into. For this, your product needs to have some universal features. It is possible that initially when you launched it, it was specific to the market where it was introduced. But when you are planning to expand it to other markets, it needs to have a much bigger appeal. You have to ensure that people like your product in other markets as well. Even if there is a franchise, branches or partners, your product needs to have some uniformity and features in all kinds of markets to stand out.
5. Think about the costing and eliminate middlemen
Once you have finished your market surveys and trial launches, you then move to the costing part. In this, a very important factor is eliminating the middlemen. If needed you can go to the source of manufacturing and begin doing the process yourself. It is better to handle the whole process yourself rather than have middlemen involved. Of course, you need to wait to take up manufacturing till you actually have enough demand and strong numbers. Your main focus should be the lowest pricing achievable at the last investment.
6. Consider moving to a nearer location
Location is a very important consideration while thinking about business expansion. It is always better to expand to a location that is closer by. If you do so, even when you take a big leap, you do not lose control of the situation and the market. You have control over the quality, sales etc because you know the pros and cons of your products. You even have a good enough know-how of the dealers. Wherever you are expanding should be reachable to you, otherwise, there are chances that your product may not work out.
Business expansion is a major decision for any entrepreneur with a business – whether big or small. It means change, diversification and much bigger volumes. You can decide on the best time for expansion after considering all the above-mentioned factors.