Seven Ways to Expand: From Local to Global
1. Increase your sales and products in existing markets.
This is obviously the easiest and most risk-free way to expand. This tactic may require a bigger location, different pricing strategies, new/improved marketing techniques – but it will be in a customer group with whom you already have a relationship. If you get off track, your present customers will let you know!
2. Introduce a New Product.
You have a successful product/service that you have been offering for some time and have been collecting data, customer feedback and doing the tinkering on your newest product. This is a normal evolution in business, not just an expansion tactic. When positioned as adding value and being responsive to customer needs, this can be a relatively risk-free way to expand.
3. Develop a New Market Segment or Move into New Geography.
Both of these areas require cost outlays and uncertainty. Moving your products into new categories or demographic segments requires market research, beta testing and new marketing strategies, i.e. a message for a 16-year old will differ that one for a 60-year old. Management of new remote locations may absorb significant time and attention. While the risks are more, the payoffs are large – and for most businesses looking to expand, these two methods of expansion are inevitable.
4. Start a Chain.
A restaurant, retail or service business that’s easily reproduced and can be run from a distance is all you need to launch a chain. But, you must be cognizant of what made the first location a success – was it location, your staff or you? If it is just you, then duplication is only possible through detailed operations plans and sharing staff between locations. You will need to duplicate the plan of your first location while meeting increased customer demands. Starting a chain gives your current staff a crack at “management” duties, training opportunities and an opportunity to expand their horizons.
5. Franchise or License.
While it’s a quick way to grow, a franchise agreement can cost (minimally) $100,000 to prepare. You will need to be a good teacher, be able to prepare the training manuals (preferably in more than one language), be very organized and willing to travel. Licensing can carry less risk, but demands giving up a certain amount of control. Licensing a patent, trademark or industrial design means that you sell manufacturing, distribution or production rights.
6. Join Forces / Strategic Alliance.
A merger or acquisition combines the best of two companies, expands your customer base, increases intellectual capital and delivers operational efficiencies. The trick is finding the right partner. These partners may be new distributors, but be forewarned large retailers exact heavy performance expectations. Can you perform to the letter of your promise? Can you meet high standards of quality (ISO, or the like) and adapt your procedures to meet just-in-time delivery? Due diligence and strong contractual arrangements are essential here.
7. Go Global.
You can decide to go global in a number of ways. Growing markets, rising consumer spending, improved business climate–sometimes the only place to find these things is overseas. Doing business internationally can take the form of exporting, licensing, a joint venture or manufacturing, but whatever form you choose, the basic business rules apply: assess customer demand, gain legal and accounting assistance, protect intellectual property and obey regulations. More difficult to understand than the regular business affairs may be the cultural nuances – ignore them at your peril. In some countries, particularly those in Asia, a local partner is virtually a requirement. Your first stop should be your target country’s economic development agency, which can help marshal local resources to get you on your way, possibly with a small financial boost. Be patient. Growing your business globally can take more than one “sightseeing trip” to the region. Here are some steps in going global, from easiest to hardest.