For many entrepreneurs, business expansion is the ultimate goal. However, developing a business strategy to expand your company requires thorough market research and involves some element of risk. Be sure to carefully plan the direction in which you want to grow so you can mitigate any potential issues.
Define What Expansion Looks Like for Your Business
Business expansion means different things for each company. It can depend on the type of products you sell, your industry and the demographics of your target market. Outline your goals in 2020 and the areas in which you want to expand your business.
Business expansion can include:
- Increasing your sales with your current products
- Developing new products for your customer base
- Entering new markets, both geographically and demographically
- Increasing your regular cash flow
- Building brand loyalty with old and new customers
- Spending less time at work while depending more on your staff
- Franchising your existing business or opening a second location
- Establishing a completely new business
Conduct a SWOT Analysis
Once your business’s growth goals are identified, it’s critical to conduct a SWOT analysis. This business activity helps small-business owners to figure out their strengths, weaknesses, opportunities and threats. You can then seek business growth areas by looking at your opportunities and strengths while managing your weaknesses and threats.
A SWOT analysis for a small-business owner includes:
- Strengths: This is in what the business excels and what helps the business to stand out from the competition. For example, strengths can be the quality of the product or the proprietary formula for a process. This can also include tangible assets such as real estate, equipment and intellectual property.
- Weaknesses: This is where your business needs to improve and what your competitors do better than you. For example, your marketing strategies may have poor conversion rates, or your product may not have any unique qualities.
- Opportunities: This section is helpful in identifying areas for business growth. It includes a new market for the business’s products or a new target audience. It can also be a new need or use for your product that did not exist before.
- Threats: It’s vital to always be aware of this section. Threats include emerging competitors, poor press about your business or changing customer sentiments. It can also include changing regulations around manufacturing or product development processes.
Incorporate Changing Trends Into Your Opportunities
In addition to conducting a SWOT analysis to identify what your small-business expansion should look like, keep current cultural, political and economic trends in mind. These 2020 trends present opportunities and threats for many businesses, so it’s vital to understand how they can affect your business.
Trends in 2020 that may affect your growth plans include:
- 2020 U.S. federal election
- Climate change
- "Me too" movement
- Mental health
- Emerging technologies
- More human connection
While aligning your business’s products or marketing campaigns with a trending topic can help you reach new markets and customers, it’s critical to not falsely make the connection. For example, if your business does not have a sustainable manufacturing process, it’s not wise to discuss how you value climate change on social media.
1. Take Care of Any Contingency Planning
One of the best ways to fuel your company’s growth is by ensuring that your weaknesses and threats are under control. Contingency planning can help keep your business’s growth plans in place during times of stress. In 2020, a large-scale economic recession, global COVID-19 pandemic and the U.S. federal election can have an impact on any successful business.
Consider what your business can do to plan for an economic or social disaster. If people are quarantined in their homes, they will not be able to visit your store. Opening an e-commerce site and offering free delivery may help your business to maintain sales during a viral outbreak, for example.
If there is a long-term recession, assess whether your business can stay afloat and how. For example, review your cash flow each month. In order to get through periods of slow growth, you’ll need to maintain your cash flow.
2. Meet Your Target Market’s Needs in a Different Way
Another tactic that can be used as a business expansion strategy is to understand how else you can help your target market. This may mean developing new products or product lines for areas of your business that excel. Look back to your SWOT analysis and the 2020 trends to see where you can expand.
For example, if you run a café and one of your strengths is the vegan pizza you offer, consider creating more vegan dishes for your customers. If it’s a unique value proposition for your business, then that means it helps your company to stand out from the competition. Plus, many consumers are trying to eat healthier and take better care of themselves, so even non-vegans may want to try your new vegan menu items.
3. Develop New Markets for Your Products and Services
An expansion plan that doesn’t require a lot of expansion capital can include growing your customer base in a new area. This may mean reaching new customers by selling in a different geographic region, or it may mean selling through a new channel. If you have a retail store, consider selling online. You may even partner with another business to sell your products in its store.
By going into a new market, you expand your customer base with the same products and services you already offer. Be sure to do your research on which channels will be most profitable for your business. It’s important to review your business model and create a mini business plan for your new market so you can assess all the risks and identify the opportunities before you enter.
4. Diversify Your Offerings
When growing a business, many entrepreneurs choose to focus on one area. However, there are some benefits to diversifying what you offer as well. If one area of the business suffers, the others can take on the burden to keep the business moving in the right direction. Review your target customers and consider how else you can meet their needs.
Diversification can mean offering new products or services or it can mean partnering with other businesses that have complementary offerings. For example, if you run a hair salon located next to a child care center, you could establish a partnership where your customers can drop off their kids at the day care while they get their hair done. This additional service can help bring in new customers or those who would not have previously considered your business.
5. Concentrate on the Customer Experience
A prevailing trend of 2020 is consumers’ desire for better and more personal customer service. While many customers appreciate having technological services that save time and money, many also want to have a human connection with the businesses they visit. Consider building an expansion strategy where you differentiate yourself from the competition by focusing on offering an exceptional customer experience.
Your customer experience doesn’t have to be in person. If you run an online business, quick and friendly emails and phone calls can help to make your target market feel special. Having a customer service policy posted on your website and social media tells your customers how much you value their business.
- Freshcaller: Growth Strategies for Small Businesses in 2020
- Keap: 7 Things You Can Do to Grow Your Business in 2020
- The South African: Seven Growth Strategies for Your Small Business in 2020
- Fast Company: These Five Culture Trends Will Dominate the Workplace in 2020
- WordStream: How to Do a SWOT Analysis for Your Small Business (with Examples)