However, contrary to popular belief, a business expansion does not always mean that your profits increase. In fact, there are many examples of businesses that failed because they could not support their expansion. A business expansion entails significant changes and this also means that you could be upsetting the roots that you’ve established in the market. In order to ensure that your business is able to grow properly, here are a few things you need to consider before you commit to a business expansion project.
The first thing you need to consider is whether you have the money to support a business expansion. It’s also important to ensure that your business already has a stable market traction. Your brand reputation is just as important as the capital you’re able to raise because a recognizable brand carries consumer trust. In fact, market traction is more important than your working capital because there are many ways to raise capital for your expansion.
One-time and Recurring Costs
A business expansion also brings new costs. Factors such as commercial rent, new equipment, infrastructure, and paperwork are some of the additional costs you have to account for. Even something as basic as city services like water and electricity can accumulate into a significant cost. Business owners need to be able to ensure that they’re capable of shouldering these costs, which is also why it’s important to plan ahead. More often than not, you’re going to be far better off if you work with professionals to help you plan your expansion. A good example of this are commercial rental specialists like the ones from the Jeff Tabor Group, who can help you secure prime office locations for reasonable prices.
When expanding your business, you also need to consider your staff. This doesn’t just mean hiring new staff to meet the needs of your business, but also training them and supporting their growth. It’s not easy to put a cohesive team together. You’re going to need new talent, as well as managers to help the new hires meet the brand’s standards. In most cases, you’re going to fare much better by hiring generalists for your business expansion because they can fill any role when the need arises.
One of the very first things you need to do is to conduct market research on the area you plan to expand to. Remember that different locations have different demographics. You need to ensure that the area you’re expanding to is full of potential customers. A failure to conduct proper market research could mean that you end up wasting your resources on an expansion to an area where people have no interest in what you’re trying to sell them. A good example of this was when Russia’s Minister of Agriculture suggested exporting pork to Indonesia, which is primarily a Muslim country.
A business expansion is not an easy venture. It requires a lot of planning and forecasting. Like in any major business decision, business owners need to be able to gather and analyze data before committing to a task.
Image source: Pixabay