Ways to expand your small business
There are many ways to grow a business. If you have completed a SWOT analysis you may have already found several opportunities available. However, it is worthwhile examining the various options.
Developing new products or services for existing customers.
It is important that the development of new products or services is based on sound research. Good market research should provide information that may be essential to success such as what your customers want, what they will be prepared to pay and how they will respond to you making this new offer.
Ideally, the new offering should have some synergy with your existing business. For example, a car service centre may decide to offer a retail tyre service, which has obvious synergy and in the right circumstances will offer real benefits to customers.
Greater penetration of existing markets with your existing products or services.
If your SWOT analysis has shown your products or services to be superior to your competitors’ yet you do not have the corresponding market share, then the same SWOT analysis should identify the reasons. If not, it may be worthwhile conducting further research.
The reasons for lack of market penetration can be many and varied. For example, it may be that manufacturing and stock levels need increasing or that the price of the product needs adjusting to be more competitive.
Entering new markets with existing products or services.
Entering new markets with your existing products or services relies on expanding your distribution channels. For example, you may currently run an IT business specialising in supply and maintenance to small businesses in Melbourne and look to opening an office in Perth.
Developing new products or services for new markets.
This approach to growth involves a deep understanding of the new market. It may be advantageous if the new offering has some synergy with your existing strengths. This can include both staff skills and manufacturing equipment. If existing equipment can be adjusted to produce a new product, you may be able to make some major savings.
Franchising.
Franchising can be highly complex. However, with the right model, it may be a very successful option. You only have to look at some of the world’s biggest brands to see how franchising can work. Many of these businesses are licensed to retail a product or service under the same brand and a standardised system.
There are various forms of franchising such as licensing a manufacturer to make and distribute your product (e.g. soft drinks) or licensing a retailer to sell your product (e.g. new car dealers). If you have a unique proposition that may suit a franchise model, seek advice from the Franchise Council of Australia. If you are thinking about franchising your own business overseas contact Austrade
Buying a new business.
Acquiring a new business is certainly another way to expand, particularly if the new business has a strategic fit with your existing business. Buying a business with synergies to your own could include buying out a competitor, a supplier or even a customer. As with merging with another business, think about the pros and cons of buying a new business. Ask yourself, ‘Does the business fit with my overall plan?’
Merging with another business.
A successful merger may quickly lift your market share, deliver large economies and increase profits. However, it is important to step slowly and carefully. Think about the type of businesses you would like to merge with – what is their business strategy and how would you describe their business culture? It is worth recognising this at the beginning as some businesses simply cannot work together.
