We live in a golden age of designer donuts. No matter how wild the flavor combination or bizarre the ingredients, these days, if you can imagine it... you can probably eat it.
You want a donut with bacon or avocados? Check.
Breakfast cereal or green tea? No problem.
But sometimes too many choices can be overwhelming.
The same is true when it comes to growing your business. There are a million different recipes for expansion and endless strategies for success. Some involve bold steps and big leaps, others are more subtle and simple. But only you can determine which "flavor combination" is the right fit for your company.
If you’re a North Carolina company considering expansion, here are nine different ways you can broaden your horizons, boost your revenue and build your business.
This is what most people think of when the word “expansion” comes to mind. If you have one location doing well, it makes sense that another location would do just as well, right? But while this is the most common way to expand, it’s also the most expensive and carries the most risk.
Experts suggest that business owners think of a new location as a second, almost independent venture that will cost 2-3 times more than you estimate. That’s why, before you go shopping for real estate, you should ask (and answer) some tough questions to make certain that adding an additional location makes sense for your business.
EXAMPLES: Open a second restaurant in a neighboring town. Lease a retail showroom space for your home-based fashion business. Add an office in a nearby county or state.
QUESTIONS TO ASK: Can your business run without you? WHY do you want to expand? Is your current location operating at peak? How can you maintain your customer experience? Are there operating systems in place that you can bring to a new location? Should your second location be close to the first or farther away?
EXPERT ADVICE: “There is no magic amount of distance between first and second locations that will lead to certain success, so accurate measurements of your industry and region are essential.” - via Small Biz Trends
Do you prefer coming up with great ideas to running a business? Licensing is a good choice for people who have a passion for product development, but aren’t excited by all of the day-to-day work that it takes to get that product to market.
On a very basic level, the idea of licensing is about developing a product and then signing it over to another company who will do the rest of the work (manufacturing, marketing, distribution). That’s the upside. But the downside is that you give up much of the control.
Licensing isn't easy, but it can deliver a great return on investment.
EXAMPLES: Most products and inventions you see on “Shark Tank” are the kind that can be licensed to bigger companies.
QUESTIONS TO ASK: Have I done enough research? Can I get a patent? What am I looking for in a “dream partner”? Who can give me the best distribution? Should I go forward in licensing without seeking professional help? (Answer: NO)
EXPERT ADVICE: “Work closely with your intellectual property attorney when submitting an idea to a potential licensee to ensure that your idea is adequately protected. Never sign a confidentiality agreement without first having an attorney review it.” - via Startup Nation
Think of this as the “business buddy system.” Alliances take many forms and are based around the concept that cooperation and collaboration can be mutually beneficial. Look for other businesses within your industry that fill a gap or complement what you are doing.
Expert opinions and studies on business success rates vary wildly and state that anywhere from 50-95% of new businesses fail. Aligning yourself with another business, pooling resources and sharing risk can be a powerful way to keep both of you afloat and prevent you from becoming a cautionary statistic.
EXAMPLES: Wineries partner with restaurants to offer tasting events or exclusive wines. Massage therapists team up with accountants during tax season. Landscapers and garden centers work together to deliver better value and client discounts.
QUESTIONS TO ASK: Can an alliance add value to my customers? What am I looking for in a business alliance relationship? Have I outlined the expectations of this alliance? Who will be in charge and how will profits be handled?
EXPERT ADVICE: “Successful alliances depend on the ability of individuals on both sides to work almost as if they were employed by the same company.” - via Harvard Business Review
In the course of focusing on “one big thing,” many business owners discover that they have also developed skills and expertise in other areas. Diversifying involves looking hard at your current situation and asking “What else can I do?” Or "What else am I already doing that can become a part of my business?"
Diversifying can provide multiple streams of income that can fill seasonal voids or downturns in the economy. More revenue streams means (of course) increased sales and profit margins.
EXAMPLES: Hair salons can sell complementary products and add new services. Restaurants can teach cooking classes. Bike shops can rent bikes. If you have expertise, you can become a paid speaker or columnist. Write a book. Become a coach or consultant.
QUESTIONS TO ASK: Can I sell online? Can I add more/different products to my inventory? What kind of services can I add? How can I use my expertise to provide more value to my customers? How else can I help people?
EXPERT ADVICE: “Don't start from scratch. Diversification means to grow in a new direction; it doesn't mean fragmentation.” - via American Express Open Forum
Maybe you’ve been lucky and your current market is serving you well. Or perhaps you’re hitting a dead end in a certain market and are looking to add new customers. Use your imagination to determine what other markets could use your product.
The process of expanding into new markets begins with identifying potential new markets based on a wide range of factors such as age, gender, income or geography.
EXAMPLES: A popular nightclub could hold dance parties for kids during the day. A beauty salon could offer makeovers for men. A high-end restaurant could start a food truck.
QUESTIONS TO ASK: Can I adapt my business to a new market? What adjustments can I make to cast a wider net or narrow my focus? How can I appeal to customers of different ages? What is my dream market? And why?
EXPERT ADVICE: “Expanding into new markets involves a great deal of market research in addition to target customers. You'll want to develop an in-depth understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry.” - via Inc. Magazine
You don’t have to build body armor or manufacture missiles to land a government contract. There are huge opportunities for small and medium-sized companies to provide all sorts of products and services to the U.S. government.
The best way to start? Contact your local Small Business Administration and Small Business Development Center to help you determine the types of contracts available to you. You’ll also need an expert to help you navigate the practices and processes, because doing business with the government is vastly different from dealing with the private sector.
EXAMPLES: The government buys everything from security services and cleaning supplies to web design and aircraft engine parts. Check out Federal Business Opportunities for some ideas.
QUESTIONS TO ASK: What does the government buy? How do they buy it? What are the advantages and disadvantages?
EXPERT ADVICE: “What the government intends to buy and how much it has to spend is all in the public domain. These budgets (actually they read more like mission strategy papers than budgets) offer sufficient context for savvy small businesses to identify opportunities and focus their contracting sales and marketing strategy.” - via The Small Business Administration
If forming a strategic alliance with another business is “going steady,” then merging is the equivalent of getting hitched. We read all the time about mergers and acquisitions in the world of big business, but it also happens on a much smaller scale. Investigate companies that are similar to yours, or that have offerings that are complementary to yours, and consider the benefits of combining forces, acquiring a company or getting acquired by another business.
EXAMPLES: Two contractors join forces to share labor, clients and resources. A garden center acquires a pottery shop. An advertising agency merges with a print shop.
QUESTIONS TO ASK: What are the advantages/disadvantages of merging? How we will deal with location or office space? How will a merger/acquisition affect employees? What is the main reason for the merger?
EXPERT ADVICE: “As important as the actual business combination is whether the respective cultures are compatible. If they clash, the result can often splinter the entity, and destroy one, if not both, businesses.” - via Quickbooks
Here’s a powerful statistic: Over 95% of the world’s population, and 80% of the world’s buying power lies outside the United States.
Taking your business to customers in other countries is really the ultimate business expansion. But tapping into those foreign markets is not so easy for a novice importer/exporter. You’ll need a foreign distributor who can carry your product and resell it in their market. You need to understand which markets will work best and, most importantly, you’ll need some help navigating the cultural and regulatory minefield that comes with taking your business beyond outside the United States.
Check to see if your business is located in a Foreign Trade Zone. Foreign Trade Zones provide significant financial and tax advantages for businesses involved in importing and exporting.
North Carolina provides help for small and medium-sized businesses who are interested in expanding to overseas markets. Here’s a great place to find a collection of resources.
EXAMPLES: Almost any product can be exported as well as a wide assortment of services and consulting.
QUESTIONS TO ASK: What countries provide the biggest opportunity for my product or service? Does exporting make sense for my business? Is exporting financially viable for my business? Are there any cultural or political issues to consider?
EXPERT ADVICE: “Beyond language, differing cultural norms may also stand in the way of a successful business expansion, if your company doesn't respect them.” - via Business News Daily
Probably the biggest expansion opportunity for any business is growing your online presence. Expanding online is a much more affordable alternative to opening another physical location and, depending on your business, the internet can open you up to millions of potential new customers.
These days, most consumers first discover a business through an online search engine. In the last 10 years, digital marketing has overtaken traditional media in terms of impact and effectiveness. The easiest way to boost your business is by “optimizing” your website to make sure that you are reaching the kind of customers you want to attract.
EXAMPLES: Think of your website as less of a virtual billboard and more of a 24/7 salesperson that can answer questions from potential customers. Make sure all information is up to date. Include plenty of pictures and make it easy for your customers to contact you. Start a blog to discuss problems you solve and share useful information with online visitors.
QUESTIONS TO ASK: What impression does my website give customers? How can I use social media to help build revenue? Can I sell products and services online? What other value can I provide on my website?
EXPERT ADVICE: “A blog not only helps your company get its name out through followers, but is a way to connect with your consumers more directly. But remember that one of the major keys of blogging is to keep your stream updated as frequently as you can.” - via American Express Open Forum