It’s one thing to start a business—it’s another to know how to expand a business. But knowing how to expand a business is extremely important if you want to sustain your business’s success and your own financial well-being. If you fail to grow and adapt your business, you risk being left behind as the market changes or having a competitor cannibalize your business.
However, expanding your business can feel just as scary. It means putting in even more work than you already do, possibly hiring additional employees, and maybe even getting a business expansion loan or other form of funding to cover the increased cost. That’s why we created this guide—to explain everything you need to know to expand your business in a way that is both thoughtful and in the best interest of your business.
But before learning how to expand a business, you need to know when to expand a business. So let’s start there.
When to Expand Your Business
Expanding your business at the wrong time can be more dangerous than not expanding at all. To know when to expand a business, consider the following factors. If several are true of your business, it may be time to branch out.
You Have a Loyal Customer Base
You should have a steady, and hopefully growing, base of customers. Having a regular flow of customers shows there is continued demand for your product or service. A strong base of repeat customers is a good sign. It indicates an ongoing demand for your products or services, as well as satisfaction with the quality of what you do or sell.
Customers Are Asking You to Grow
If customers are asking for more products or services and hours, it might be time to grow to meet customer demands. Hopefully, your growth will satisfy customers, which will increase sales and make up for the money you invest in expansion. Take notes of what your customers ask for, and then look at patterns. This way, we know exactly where we need to invest.
Your Business Has Been Profitable for 3+ Years
Look at your business’s net income. This will tell you how much money your business is actually earning after you pay your bills. If you have regular, increasing profits, it might be time to grow your business. A recent surge in profits isn’t necessarily enough to justify a business expansion—it could be temporary or seasonal. However, steady profitability is a sign you’re doing something right and that your business model will work elsewhere.
You Have a Strong Team of Employees
When it comes to running a successful business, the most important thing you can have is a strong and dedicated team. Expanding your business will put a lot of stress on those working for you. Ensure that those you have on board now can handle everything that goes into building your business up. You should have managers and staff that understand your goals and are dedicated to helping you actualize them. If you have these workers in place, your chances of successful business expansion improve.
Your Industry or Market Is Growing
If your industry is growing, expanding your business will be easier. Even if your business is in an industry without growth, you might be able to expand your business by offering new products or services. Think about offerings that can help future-proof your business. These new products or services can help you gain the income and stability to grow further.
You Have Steady, Positive Cash Flow
You can be selling record amounts of your product or service, but if you’re not getting paid on time or not managing your cash flow wisely, you won’t have the financial foundation you need to fund business expansion. Review your business finances thoroughly to make sure you can handle the cost of expansion.
You Have More Business Than You Can Handle
You might come to a point where you’re bringing in more business than you can handle. You might need more workers or space. Find a larger space for your business, or maybe start a second location to better serve customers in a larger area.
You Have Operational Systems in Place
If your business is still operating by the seat of your pants, business expansion is not yet in the cards. You’ll need documented processes to train new employees, replicate your services at other locations, and ensure consistent quality.
You’re Running out of Room
When you find yourself bursting at the seams with work, then growing into a new space will be a great solution. If your employees are sitting elbow-to-elbow, you’re tripping over paper stacks, or you have to take client meetings outside the office because there’s no room inside, then it’s time to seek a larger space. Growing will allow you to better serve the customers you have now. It will also give you the opportunity to bring in new talent.
How to Expand Your Business
Now that you know when to expand a business, let’s look at strategies for how to expand a business. Note that every business is unique, meaning that not all these strategies will apply to you. However, we feel that every business owner will be able to utilize at least one or two of these strategies in their expansion efforts.
Add New Offerings
One of the most obvious ways to expand your business is to add new products or services to your mix. Talk to your current customers about other offerings they would like to see from your business, and what they’d be willing to pay for them. Just remember not to pivot too far away from your core business – the key here is to diversify your offerings so that they complement each other.
Optimize Your Existing Market
The first step in expanding your customer base is to reach out to your happiest customers and ask for reviews, testimonials, and referrals. Transforming your best clients into brand advocates means that when someone asks a peer for a recommendation or begins comparing reviews online, your brand’s reputation will stand above your competitors. Growing your business doesn’t always mean getting new customers—it can also mean selling more to your existing customers.
Hire wisely
Hiring the best employees possible is a major catalyst to fueling business growth and innovation. Employees of small businesses have greater opportunities to make a direct impact on the business than someone at a larger organization. Take time to carefully review resumes and properly vet candidates to ensure you’re only hiring professionals who’ll provide lasting value to your company.
Move Into New Markets
When you move into a new market, you are trying to sell your existing products or services to new customers. The new market could be customers in a different location from where your existing customers are or a different market segment within your existing location. This typically means opening a new location or focusing your marketing efforts on a new customer segment.
Seek Referrals
One of the most effective ways to move into new markets is by seeking out customer referrals. After all, 83% of consumers trust the recommendations of family and friends over other forms of advertising. The best way to drum up word-of-mouth marketing is to have a customer referral program—a systematic way of getting current customers to refer others to your business. Referred customers historically have a higher lifetime value and retention rate and are significantly cheaper to acquire than non-referred customers.
Integrate social media to grow your online footprint
Everyone who interacts with your business likely takes the time to review your online presence. Social listening on your website and social media gives your business insight into your customers’ behaviors, trends, new keywords and, most importantly, what customers are saying about your business. Learning how to carefully integrate social media into your daily business helps you better manage your reputation and attract new customers.
Launch an Ecommerce Website
Making your products available for purchase online is a great way to extend your market reach. To do so, you’ll need to set up your website using an ecommerce platform, then focus your SEO and digital advertising efforts on attracting customers outside of your business’s physical location. Having an ecommerce store makes it easier for customers to discover your products or services.
Partner With Other Businesses
Partnering strategically with other businesses can give you access to a whole new market segment. Ideally, you’ll find a partner whose products or services complement your own. It’s not a binding agreement like a joint venture. Instead, it’s about two companies sharing complementary services in an effort to expand their reach and profits.
Acquire a New Business
By buying an existing business you can literally double the size of your business overnight. But you need to find a business that complements your own, and that is in solid financial condition. You should also have an idea of how purchasing the business will help strengthen your own business.
Research Your Competition
If you’re not sure what to do next when considering how to expand your business, see what your top competitors are up to. Learning what your competition is doing can help you understand what your business needs to do next and inspire you to grow your business in new ways.
It’s important to remember that businesses can appear ready for growth, however, rushing this move can end up destroying your business, rather than improving it. Have a thorough understanding of your business as a whole. This includes your staff, your clients, and the industry itself. With this, you will be able to really make a decision on expanding.
Success doesn’t usually happen overnight. However, by using these strategies, you can make the kind of progress that translates into continuous success. Viewridge Funding can help with all aspects of expansion when you feel the time is right. With our merchant cash advance options and our equipment financing, we’re here to help you achieve all of your goals.