Reasons for Expanding a Business

by Chris Joseph; Updated September 26, 2017

Whether you own a small or large business, the time may come when you begin to consider expanding your operation. Ultimately, your main reason for expanding is probably to generate more revenue. However, there are more specific reasons that expansion is the right choice for your business. Expansion can involve increasing physical locations or offering more products or services.

Establishing New Markets

Expanding your business can allow you to establish new markets and reach an entirely new customer base. This often occurs when companies establish a base of operations in a new country where there is a great need for their products or services or when attempting to establish a more global presence. Establishing a new market can also reduce the effects of tight competition due to oversaturation in existing markets.

Increased Volume

If your business started on a relatively small scale, you may need to expand to handle an increase in volume. For example, if you opened a small restaurant and you've built your client base to where you must turn people away or require reservations well in advance, you may need to consider expansion to accommodate the increase. Expansion may take the form of remodeling an existing facility, constructing a larger building or opening additional locations.

Additional Services

Expanding your business allows you to provide additional services that are related to your current operation. A hotel owner can consider adding a restaurant inside or next to her place of business to further accommodate the needs of her guests. A bookstore proprietor can add a coffee shop to allow customers to enjoy a snack or a beverage as they browse. A restaurant with a primarily adult clientele can add a children's menu to create more of a family-oriented client base.

Building a Brand

Expansion helps to establish your business's brand and identity. By using methods such as franchising, a business model common among well-known fast-food restaurants, you can turn a small business into a larger operation by selling the rights to open new locations to other entrepreneurs. In return, the franchisees agree to follow your established operating procedures. As new locations open in different areas, your brand's identity also spreads, which leads to additional revenue for you.