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Expanding your small business can be an exciting yet daunting task. There are many considerations to make regarding whether a small business should expand and, if so, how to expand. Here are some tips for expanding a small business to help navigate this challenge with more focus and understanding.
1. Improve Processes
Your entire business operation runs on a range of step-by-step phases or processes. These processes can be onboarding a new customer, manufacturing, or other tasks. If you take a closer look at the processes that run your business, you will realize their costs and benefits. So if you can improve processes, your business will reduce costs, boost its productivity, and therefore profitability.
Many businesses make the mistake of expanding before their processes can handle the increased workload. Get your processes as organized and automated as possible with project management tools and robust strategies in place, such as agile methodology. This involves breaking a project up into several phases to continuously improve the end result.
2. Utilize Technology
There is an abundance of technology available to help small businesses, from financial reporting to inventory management to communication apps. Many of these technologies cost money, but the productivity and analytical benefits should pay that money back and then some.
Be sure to choose technology that is a fit for your industry and the needs of your business. With the right technology, you can save time and money on tasks. If you spend less time completing a task, not only will customers appreciate the prompt service, but you will have more time for high-value and impactful strategic tasks to expand your business. Technology can improve your margins or productivity; either way, you make more money on the same amount of sales or increase sales potential.
Technology has also created new sales channels for your business. You can sell your products through a website, app, or social media. The internet offers multiple sales channels and a cost-efficient advertising platform.
3. Add New Products or Services
Adding new products and services is a great way to expand your business. New products can help you capture more of the current market or help you expand into new ones. It’s also an effective defensive strategy against your competitor’s market share by occupying as much of the market as possible, thereby limiting their size.
New products help you capture new customers and deepen your relationship with current ones. Launching new products is an effective strategy if you do your research. You want to sell the market what it needs and at an agreeable price.
To do this successfully, ensure your finances and processes can accommodate new products. Doing so will likely involve investing some of your money, so be prepared to cover this cost until profits start coming in. Your small business should also be able to withstand any losses you may experience if a product or service is unsuccessful.
You want the expansion plan to improve your position, but it should never affect your current product portfolio. It’s unnecessarily risky to build your business on product A then jeopardize your progress by pouring everything into new product B.
4. Expand Your Customer Base
Explore new territories and audiences you can reach with your business. Social media is an excellent resource to get these new audiences as geographic limitations do not bind it.
Consider rebranding your business to appeal to a more expansive customer base or to have more variability in how you can present your brand. Branding makes your product resonate with the target market, so if you plan to enter new markets, you may need to change your messaging.
5. Analyze Finances
Generating detailed and useful financial reports can help your business understand how to cut excess spending, where you can invest more money, and whether expansion is feasible at this time or not. At the end of the day, money is what pays the bills. It keeps your lights on and pays for any aspirations you may have. Managing your finances to ensure that your business stays afloat and can handle shocks or expansion plans is vital for your future.
Analyze your finances carefully to identify the best way for your business to expand, whether through hiring more employees, investing in more inventory or growing facilities, and so on. Analyzing your finances is essential at every stage of a business’s life, especially leading up to an expansion. So, do this as early as possible, even if expanding is far away.
Plan for the New Opportunities
Expansion is a natural business growth process, but that doesn’t mean you shouldn’t plan for it. With the right plan, you can reduce the risk and improve the odds in your favor. An effective expansion plan will strengthen your financials, marketplace, and stability in the long run.