Ways To Expand Your Business
There are those content to remain where they are, but this is seldom a good strategy unless you plan to liquidate your business eventually. Competition will likely swallow your market if you keep still.
If your business is doing well, it may be the best time to think of how to go to the next level. There are many ways to do this, but ideally you should do it in such a way that there is not too much capital needed and that in case of failure it would not bring down the entire business. The following are some of the best options on how to go about this:
1. Buy a soon-to-close business. The best thing about buying a business in distress is that it is usually offered at a bargain price. The owner of the company is normally desperate to get rid of the business. Oftentimes the most valuable asset a business has is its customer base. In many industries, it is extremely difficult to acquire customers. The next potential gold mine you may obtain when buying a company is its pool of skilled employees. However, be very selective and make sure what you are getting would indeed be a help to your organization. Be careful to minimize the risk of hidden liabilities by buying the assets of the company rather than the corporation itself.
2. Add another shift. This option is frequently good for manufacturing companies. You can double production capacity with very little additional investment. A major problem here is how to make people accountable for proper maintenance of their equipment and premises. If machinery breaks down due to negligence in maintenance, it may be difficult to place accountability if there are two people or shifts operating the machines. Another thing to consider is if you could get capable and trustworthy employees.
3. Tie-up with a complementary business. This is one of the best ways to expand your business. Look for a company that caters to the same market but does not compete with your offerings. You can then negotiate with the company to promote each other to their clients.
4. Offer your business as a franchise. The advantages of franchising your business are numerous. First is the potential for limitless growth since franchisees would be putting up the capital. Second, you get plenty of fine locations that you otherwise would not have access to. Third, since franchisees invest their own money, they are more motivated than hired managers—if they are the ones operating the business.
5. Look for new markets. If you are currently operating only in Metro Manila, you may explore the sales potential in the provinces, especially in large urban areas like Cebu City. Those based in the provinces should not be afraid to compete in Metro Manila if they have a superior product or service. Entrepreneurs should also try foreign markets; exporting is not only for large companies. Many small- and medium-sized firms have been extremely successful in exporting their products.
6. Add related items or services to your main line. If your current market is already consuming an item, it would be a simple matter to add this to your inventory. Another very profitable strategy is to sell services connected to a product you are selling. You can offer financing, rentals, maintenance and other services. Being the vendor of the product puts you in the ideal position to be a supplier for other items.
7. Be your own supplier. There may come a time when you are capable of making some of your own supplies. For example, a meat shop vendor may decide to go into the piggery business. Besides generating more profit, there is the added advantage of having better control over the quality and supply of the item.
8. Go direct to your customers. On the other hand if you now sell to retailers or distributors, you may try going direct to your customers. Note, however, that this may be a dangerous strategy for you will certainly alienate your current distributors who will now see you as a competitor instead of a partner in their business. They may decide to go to another supplier instead. Unless you have unlimited resources and supreme confidence in your plans, you should take care not to burn your bridges with your retailers. An example of going direct to the consumers is a certain generic drug distributor who ventured into drugstore retailing. In this case, the gamble paid off and the company is now the leading chain of generic drugstores.
9. Outsource for more sales and profits. Outsourcing is now a favourite option to improve profitability and to speed up growth. There are many companies, both large and small, that use this strategy to hasten their expansion. They just focus their capital investment on their core competence and contract functions that are not their expertise. This increases their rate of return and also provides them with flexibility. It is easier to add or reduce manpower depending on their needs.
10. Learn Internet Marketing. More and more transactions are being conducted over the Internet. Even the sales that are not done online are still heavily influenced by what people discover while browsing. Nowadays, it is no longer sufficient to just have a website; you must also know how to promote in cyberspace. The current hot trend is the use of social media for marketing. Using the Internet, you can also sell your products to other countries.
Business expansion is the natural progression of a prosperous venture. Nevertheless, it is not to be done by gut feel alone for there are many risks involved. There must be a careful study of how to best expand your business in order to maximize your chances of success.
*Originally published by the Manila Bulletin. 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.