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How To Expand Your Small Business
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Article 2: Research & Planning
You’ve established a profitable small business, but maybe you’re constrained by geography or you’ve saturated the local market. Like any ambitious entrepreneur, now you desire to expand.
Before expanding, there are a few considerations. If you originally set up shop properly, these research and planning tasks will be familiar. If you took shortcuts, you’ll probably need to re-evaluate your existing business before moving ahead.
Most startup businesses fail because they don’t adequately plan. The same planning considerations – marketing, finance and operations – apply to expansion.
There are two aspects to expansion: what you know and what you don’t. To determine what you don’t know, ask these questions about the new locale:
Are my types of proven buyers present there? If so, how will I reach my market in this new place? Is the new location changing, and if so, is it becoming more or less compatible with my products and services? How will I find the necessary staff and train them? What additional expenses (like shipping, taxes, rent, advertising, wages and employee benefits, telephone and other utilities) will I incur because of the distance? How much extra drain on capital and cash will be involved establishing a new presence, and how long will those extras last? How will I finance expansion costs, and how will that effect my overall operating profit, and for how long? Will I have competitors I don’t have in my present location? How will I track them? What can I do to win a profitable market share?
Resources to help you obtain the raw data concerning these questions are provided in later articles in this seminar.
Whatever your analysis shows, there is one caveat. Don’t expand unless you can identify increased or new demands in the market.
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