A business expansion can be small or large but regardless of the scope, there are 3 main questions to make sure you can answer before expanding a business. The following is an excerpt from the Complete Business Expansion Guide, which you can get for free, here.
1. Can the business model be duplicated?
Success is often closely tied to the presence of a specific person on location, especially with owner-operated businesses. Business owners need to have a clear, unbiased answer to this question. A retail outlet where the owner only oversees administrative tasks that can be taken over by a trained professional in a new branch, can choose to expand.
If it is a grocery store where customers know the owner by name, and choose to shop there because of this personal connection, expanding to a new location may need some careful consideration and a good plan.
2. Has moving online been considered?
Especially for retail business, an online store can help businesses delve into untapped demographics, without having to construct a new brick-and-mortar outlet. Over 36% of shoppers search and buy products online.
However, the success of an eCommerce store depends on the type of industry and business model.
3. Is the new location the right location?
Intuition and guesswork can’t make the decision of opening a new store when the facts show that the market is already inundated with powerful competitors. Confirm objectively whether the information you receive on a new location is valid. Study target markets, and gauge existing demand as well. If there isn’t adequate demand, there will be an increase in marketing costs. Determine the cost/time and Return on Investment (ROI) of marketing efforts.
Other considerations to make:
- Are there sufficient funds for expansion and how likely is the expansion to make profits that justify it?
- If you are the owner-operator, are you willing to put in the additional hours and effort?
- Is the current location actually too small to warrant a new location or can you maximize your current space with a remodel?