At one point or another, most successful companies need to enter new markets. This happens when continued efforts to maximize existing markets are less valuable than entering new markets. It’s a simple matter of opportunity cost. Expanding to a new market could take your small business to new heights, and with the right market expansion strategy, your company can prosper for decades to come. You just have to start by keeping in mind that each market is unique, nuanced, and full of its own quirks. But it takes a wellplanned process to accurately assess the potential of each growth opportunity or market, because a bad bet can bog down your business. You have to maintain your service levels across all of your markets, so plan carefully. In this write-up, we have tried to identify top tips for you to do it well.
- Feedback from your existing customers: You need a proper understanding of your strengths and to determine that, you will need to know why your customers keep coming back or not. Obtaining their feedback may reveal strengths and potential product lines you hadn’t considered, allowing you to refine and strengthen your expansion strategy.
- Identifying your new market: Consider the demographics, location, and common interests or needs of your target customers. You’ll want to develop an in-depth understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry. This is particularly important if you are looking to enter a relatively undefined market. Markets should be prioritized based on the strategic fit and your ability to serve them.
- Research the legalities: Before you commit to an expansion, make sure you understand all of the legalities surrounding your industry and your tax obligations in the new market.
- Competitor analysis: You can learn a lot by keeping a close eye on your competitors, seeing what they do well and what they don’t. Start by identifying your top three competitors and go from there. Analysis can always be purchased, but it is possible to do it yourself.
- Prepare your finances: If you need to apply for a small business loan for the expansion, be thorough in preparing your presentation, especially if you’re a young startup with limited financial history. Newer businesses must be able to show a strong business plan and make the case for why the expansion will be financially viable.
- Develop Market Entry Options: Develop the business plan, case for investment, and implementation work plan, including owners, timelines, tasks, and key milestones to enter. If you are entering an entirely new market, with limited core assets to leverage, you should consider a joint venture/partnership or acquisition. These options require target identification, prioritization, due diligence, deal negotiation and close.
