Expanding your business can be a great opportunity to increase your profits, your brand exposure, and your clientele. However, such a move should be approached carefully if you want it to be successful, as it can take a lot of time, resources, and energy. Because of this, you want to have a solid expansion plan in place before you begin breaking ground on a new location, or even a new market. Your business’s specific expansion plan will vary based on the kind of expansion you’re wanting to achieve, but there are basic steps that you should cover.
This should be your first step once you start considering business expansion. Market research can help you identify areas you could expand into. It can also give you a clearer picture of what your audience needs or wants in relation to your target product or industry.
Additionally, market research can give you some insight into the current trends that may affect your industry. Understanding these trends can help you more easily appeal to your target audience.
Choice of Location
If you’re looking to expand into a new location, market research is especially important as a way to orient yourself in a market you’re less familiar with. It can also give you insight into locations that would particularly benefit from your services or products. Saturation is also an important part of choosing your location. If you’re looking to open a flower shop, you don’t want to pick a street with three other competitor businesses. You can be successful in a highly competitive area, it just takes more time and resources. This could provide more stress on a new business that’s unnecessary.
The next step in creating an expansion plan is to review and update your existing protocols. For example, expansion may cause changes to your client onboarding processes, which will need to be reflected in your company protocol so employees can start making these changes. Additionally, updating your policies before expansion can be a great way to introduce the idea to your team, and prepare for the upcoming changes.
During any update, it’s important to communicate clearly and early to all employees so that they know exactly what to expect going forward. There’s always an adjustment period for new policies, which is why communication is so important. Make sure you make any updates to the company policy manual available to all employees as soon as any changes are made.
Compliance With Regulations
When making an expansion plan, you’ll also want to make sure you comply with all legislation and other pertinent regulations. For example, if you’re opening a new location in a new state, you’ll want to review that state’s employment laws, as they might be different from the regulations in your original state. Establishing an HR team for a new location is a must for this step, as they can help guide you through the regulations your business will need to follow.
If you’re expanding your product or services list, you’ll want to review production standards and licensing. This way you can ensure that you’re legally able to sell your product, and follow all safety guidelines during manufacturing. This protects your business, as well as your customers.
The cybersecurity needs of a large business may differ from those of a small or medium business. Expansion also opens up more access points for cybercriminals, as data is being transferred and new accounts are being opened. This is why it’s important to update your cybersecurity measures as part of your expansion. Not only will this help keep your business’s proprietary information safe, but it can also provide unique solutions for expanding businesses. Things like scalable remote monitoring services and remote access software may be needed as you expand to multiple locations.
With business expansion often comes a need for increased staff. New positions may be created, as well as higher volumes of work. Steps such as advertising for positions, vetting potential employees, and employee onboarding may change as a business grows. It can be helpful to have your policies and process updated before you bring on new staff, this way you can train everyone on the new processes all at once.
You may also find yourself hiring different types of employees as your business expands. Instead of hiring permanent positions, you may outsource certain projects, or work with partners like MSPs, who are on an as-needed basis, rather than in-house. This can be cost-effective, especially in the early days while you’re still figuring out the positions you need to be filled full-time.
Employee training may need to change as a result of expansion, either in response to changing business operations or as a matter of compliance with new regulations. Different positions that might not have existed in your original business model will also require different training. For example, hiring or promoting someone to be the general manager of the original location, while you, as the business owner, oversee the new location will require a different kind of training than new entry-level positions.
Creating new and effective training processes can be done by pairing with an HR department, delegating to higher-level employees, or even simply writing out processes ahead of time that employees can refer back to independently.
The pricing of your products and services is incredibly likely to change during expansion. The addition of new products or services can affect pricing, as well as new costs associated with manufacturing and running your expanded business. Price increases can be a tough sell to those who may be used to old prices, but there are ways that you can navigate this without losing customers. You can:
- Introduce new prices in stages: Raising your prices in stages, rather than all at once, can be a less severe way to introduce customers to higher prices. For example, you increase prices seasonally until you hit your target price.
- Offer incentives/rewards to customers: Introducing reward systems for customers who shop with you is a great way to soften the impact of increased prices. For example, offering 10% on purchases over $50 can incentivize shoppers to spend more to redeem a reward. It can also make shoppers feel like they’re getting more for their money.
- Add-on fees: This works specifically well if you’re running a service-based business. Adding fees rather than directly increasing the price of the service can be a good way to make customers feel like the price of your service isn’t going up. For example, a nail salon could start charging a fee for using more than one polish at a time but keep the price of their manicures the same.
Your new pricing should also reflect your new cost of business. Running more than one location, or expanding your product list, comes with increased costs. This is why expansion has a direct impact on product pricing.
Risk assessment can be one of the most crucial steps in planning for business expansion. It can save you time, money, and even prevent your business from suffering unrecoverable losses. You can perform your own risk assessment, or you can hire a professional. There are benefits to both of these strategies — doing your own risk assessment can save you money, and give you an idea of how expansion will affect your current business model. However, if you have a professional perform a risk assessment, you can be more confident in their findings, as this is what they do for a living. You can also get professional advice on how to overcome the challenges that may be revealed by a risk assessment.
Business expansion is a huge step for any business owner to take. It’s important that you don’t take this step lightly, and that you go into the actual expansion process as well-informed and organized as possible. Creating an expansion plan with the above steps can mitigate some of the challenges and hardships of the expansion process.