How do you know when the time is right to kick your business expansion into high gear? Read on to get an idea on what signs to watch out for, and how you can further expand your business.
By the myBusiness techblog team
Although one can argue that a business is already expanding from the day it starts operations, there will come a time where your business will need to change in order to continue being profitable. Expanding your business when you reach this point might be the right thing to do. But what are some tell-tale signs that your business has reached this tipping point? Here are some of the most obvious signs:
- You can no longer fill customer needs in a timely manner. Customers are leaving empty-handed or going elsewhere because you are “too busy” and can’t cope with their demands.
- Employees can no longer keep up with production demands. They begin making more and more mistakes and are missing deadlines. Absenteeism increases and production falls. Due to the increased pressures of your job you begin making poor business decisions or using a “quick fix” for problems that need long-term repair.
- Your direct competitors are expanding and taking business from you, and because of that you should at least evaluate the possibility of expansion.
- Changes in the marketplace or industry such as government regulations or new competing products or services might force you to change the way you do business
How should you expand?
There are plenty of ways to expand a business. You can look to expand your business to new customers by introducing a new location, acquiring a competitor or moving into a related industry. Not only will these expansion opportunities help position your company for continued growth, but they will also enhance your business’s selling power once it comes time to exit the business.
However, you shouldn’t just think about expansion in a physical sense. You might also want to think about expanding onto different marketing channels if you have not already done so. By engaging your customers better online on social media platforms such as Facebook, for example, you can focus on your current customer base and adapt your business’s offerings to fit your customers’ changing needs.
You can also think about expanding your inventory selection to provide more products or services to cater to a larger variety of demographics. Excellent customer service is also essential when today’s consumers have many options available to them. Expanding and providing additional support hours at the request of customers, for example, is a sure-fire way to maintain a more loyal following and possibly generate word-of-mouth recommendations.
Taking your business beyond local shores
If you do decide to expand your business overseas, you should first conduct some feasibility studies, namely:
- You need to research and understand the foreign market. This will help you determine if there is a demand for your business offerings. Some sample questions to ask can be: Are there substitutes for their products? What are the competitive advantages? Are their products more affordable, of better quality, or have more functions? What are the spending habits of the target customers? What are the channels that they can tap to reach out to the target customers?
- You need to understand the country’s political and governmental environment. This includes the nuances governing the rules and regulations of operating a venture in that country. For example, you need to know what it takes to set up a company, as well as licences, custom duties, foreign exchange control, manpower issues, foreign investment restrictions, tax rules, and so on.
- You are should also draw up a proper business and financial plan. Set realistic goals and ascertain the financial resources needed to fund the expansion. They will need to consider capital expenditure and the working capital requirements of the new business. If external financing is required, they will need to evaluate how they can go about securing the funding prior to embarking on the ventures.
Where to turn to for help with expansion
After the recent 2013 Singapore Budget announcements, the Government has placed an emphasis on helping local SMEs to expand their business abroad with grants such as the Marketing Readiness Assistance (MRA) Grant. With the MRA Grant, SMEs can appoint a pre-approved advisor or consultant for areas such as foreign market assessment and entry. The grant is aimed to provide local SMEs with a global headquarters here and turnover of less than $100 million, and will allocate $18 million worth of funds to help SMEs in defraying the costs of legal advice, tax advisory and consultancy services. Under the three-year-long scheme, International Enterprise (IE) Singapore will co-fund up to 50% of qualifying costs, capping at $20,000 annually per company.
Remember that sometimes, expansion isn’t the right choice for every business, and can be a tricky affair. Expanding too quickly or too much can incur increased expenses that can overwhelm the business. Expand too late and your customer base can be depleted by your competitors. So if you think your business is ready for the next step of growth, plan it well, and take the next step in your business growth.
Has your business encountered its expansion phase yet? Has your expansion been successful? Please share your experiences in the comment box below.