Growing a business that started small into something bigger is not easy. According to research, only about ten percent of companies will ever reach $250 million in annual revenue. And an even more microscopic 0.036 percent will reach $1 billion in annual sales. So, in other words, most businesses start small and never leave that point.
But if your dream is to grow your small business into a big brand—or you think staying small won’t help your business thrive in the long haul—then you need to learn from those few companies out there that have successfully transformed from small startups to full-thriving big brands. That is, you need to learn how to develop a business expansion strategy for your small business—and implement it.
Getting your business on the pathway from small to big requires putting together an expansion strategy that will bring you the result you want with the least amount of risk and effort. With this in mind, I advice you read on to understand how to develop that kind of expansion strategy for your small business.
Developing a Business Expansion Strategy – Sample Template
First, you must bear in mind that your business expansion strategy needs to be developed based on four factors: operational skills, growth skills, special relationships, and privileged assets.
- Operational skills are those “core competencies” of your business, which can lay a solid foundation for your expansion strategy. For example, your business may have strong competencies in technology, distribution, or customer service.
- Growth skills are the skills you need to apply in order to successfully manage or implement your expansion strategy. These include new product development skills, prospect attraction and conversion skills, and acquisition negotiation and integration skills.
- Special relationships are those connections you have established that can open up new options. For example, your business might have established strong connections with certain trade bodies in the industry that can ease the process of exporting your products to foreign markets.
- Privileged assets are those assets your business has that are hard to replicate by your competitors. This could be a well-established brand, a custom-made technology, a large customer database, or a team of the best employees.
Once your business has all these four factors in place, then the process of implementing your expansion strategy will become much easier, and you will get results within a short period. Therefore, the first part of your expansion strategy must focus on establishing these fours factors.
The second part of an expansion strategy entails how exactly your business will achieve growth after having the four base factors in place. Here are the main approaches you need to adopt in order to expand your business:
1. Existing products to existing customers-: This least risky approach to expansion for any business is to simply sell more of its current products its current customers. If you want to see this approach in action, you need to look at large consumer goods companies who have a set minimum volume of goods you can buy—a set minimum that increases with time. So, you can start selling your products in batches of 3, 6, 12, etc. rather than selling single units.
Another way to sell more of your products to existing customers is to suggest new ways for them to use your product—such as turning baking soda into a deodorizer for refrigerators.
2. Existing products to new customers-: Another approach to business expansion is to find new customers for your existing products. You can achieve this by intensifying your marketing efforts, provided you have not reached most or all of your local market. But if you have conquered you local market, then you should consider selling your products to an adjacent market by offering your products or services to customers in another city, state, or country. You can also attract new customers by pursuing them, using new channels, such as selling your products online, for example.
3. New products and services-: If you have a large customer base, you can come up with entirely new products and services that your customers will most likely be interested in. A smart strategy is to figure out what products or services your customers are buying from competitors, develop the same, and offer them to your customers.
4. New delivery approaches-: You may also figure out if there are ways in which your existing products and services can be sold via new or emerging channels that might boost sales.
5. New industry structure and competitive arenas-: This approach involves acquiring troubled competitors or consolidating the industry through a general acquisition program. In addition, you need to look out for—and capitalize on—opportunities for horizontal, backward, or forward integration.
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