Considerations In Business Expansion

For every successful business out there that has been using the same procedure and selling the same products and services for years, the time will come when your business would inevitably be stagnant. No matter how strong income generation was before or how in-demand your product was the first few years, if you have been doing the same thing, expect to hit a brick wall soon.

But for those who want to have a fighting chance in today’s economy, consider business expansion. Maybe some of you are thinking that expanding the business will take so much time and effort, and involve risks. These are all true, but being prepared and informed will help you in your endeavor. To better understand business expansion, you need to know first what kind of expansion you want to have.

PRODUCT AND SERVICE MIX

The term “business expansion” does not automatically mean putting up a new branch/office and incurring the same amount of capital again for expense. It could simply mean adding new products in your product line or providing new services. When it comes to products, you can either add new types/flavors, innovate your original product, or even both. Just be careful in innovating old products like changing the ingredients of a best-seller; sometimes, it’s the “original” your loyal customers like. When it comes to services, try offering new services that would complement your main service. Think about adding a masseur in your barber shop, or car repair in your carwash. There are a lot of things you can add, most especially if your business has only been providing one specific product or service for many years.

LOCATION

Putting up a new branch might probably be the biggest type of business expansion for your organization, especially if you’re a small or medium enterprise. Before you do so, consider the following:

Finance. Putting up a store in a new location means you have to find an available area, rent it (or buy it), and furnish it with everything from the equipment down to the supplies. It would be good if the space you get is already furnished, but you still have to deal with matters like new equipment and fixtures. This also means that you will have another area to pay for rent, electricity, water and Internet connection.

Human resource. Of course, a new store means a new set of manpower. A new manager (unless you wish to be intimately involved with all your stores), a new salesperson, cook, and any other type of employee you have in your original store. It is time to compute for the salaries.

Operation. Will the stores have the same operating hours? Will the new one be closer to BPOs that stay open later (or even 24 hours)? How will you deliver supplies to both stores?

Marketing. How do you plan to market both stores? Will they have the same promotional materials or do you want each to have its own identity? How about in your social media accounts? Will they have separate pages or a unified one? Your marketing effort should account for all the factors surrounding each store, including the demographics of the customers, peak time, and length of stay in the store.

Management. How do you plan to manage the business? Will you delegate? Or will you keep on wishing for cloning to be commercialized as you go from the end of northern Luzon to Manila to manage all your stores? In expanding your business, you have to be prepared for all the adjustments in your management.

Given the huge amount of expenses that go with expanding your business, is there a good side to it all? There are tradeoffs, to be sure, but think about such benefits as being able to reach a different market, and potentially increasing your sales to twice or thrice its size. Exclusivity may be more stable, but you will only be able to accommodate a limited number of customers in your single store—not to mention, a lot of interested people who will not be able to visit your store because you don’t have a nearby, or at least a convenient, location to them.

Expanding a business must not be decided on gut feel alone. There are major issues that should first be addressed before embarking on the process. While it can be argued that ultimately luck would still overshadow other factors, your chances of success would be higher if you have a well thought-out plan.

*Originally published by the Manila Bulletin. C-6, Sunday, March 15, 2015. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.