Are you at the point in the lifecycle of your business where you’re ready to tackle a new market? It’s an exciting prospect, but to succeed, you need to be smart and stay focused on best practices for expansion.
Assess your company’s readiness.
The first step in expanding is evaluation, not action. You might be all set to jump into something new, but does it really make sense for your business right now? Assess your current situation to determine if:
- Your cash flow and budget are sufficient for investing in a new market
- You have a strong, talented and supportive team
- You’re meeting or exceeding all your business goals
- The customer base can continue to support your current operations after expansion
If your business meets these criteria, you should be all set to expand. What you need to know before making a decision is whether a new market segment or location can be fully supported without taking away from the money, talent, resources and marketing efforts necessary to keep things running as they are. Trying to push into a new market without sufficient support could negate the potential benefits of expanding and undermine your company’s success.
Market expansion options to consider.
Where or how you should connect with a new market depends on the results of your assessment and the amount of time and effort you have to devote to this new phase of growth. Here are five options to explore as you consider the best way to reach additional customers.
Diversify the payments you accept.
For very small businesses, getting sales from new demographics may be as simple as upgrading to a new point-of-sale (POS) system. Credit card scanners should be standard equipment for every business, but if you’re not accepting plastic yet, there’s no better time to start.
Getting a POS designed for credit card, debit card, and mobile payments can open up your business to a younger market. Millennials, in particular, are fond of debit cards, and both millennials and Generation Z embrace near-field communication (NFC) payments using mobile wallets. Younger generations are early adopters of technology and prefer to do business with companies accepting a wide range of payment types. The more payment types you can process, the larger your potential customer base.
Marketing the introduction of credit card scanners to your business is easy, too. Just let your audience know you now take major cards and are equipped for mobile payments, and you might be surprised by how many more people come in the door.
Find a new audience.
Another way to target a fresh group of customers is to figure out who else can benefit from your products and services. For example, a cleaning company whose primary customers are busy millennial professionals could also offer services to frazzled moms who want a break from housework or seniors in need of help maintaining their homes.
To find a viable new market, have a brainstorming session with your team. Evaluate the benefits of your products and services, and consider how you can reach out to consumers who aren’t yet familiar with your company but might be interested in what you offer.
Changes have likely occurred in the industry and in customer buying habits since you first launched your company, and these might provide additional avenues to explore. Take a look at customer analytics from your CRM, and note the trends you find. Evaluate this data in light of recent actions of and changes by your competitors to identify gaps you can fill by reaching out to customers with unmet needs.
Get creative with products and services.
If your current offerings don’t appeal to a wider audience than the one you already have, it might be time to introduce something new. The trick to this strategy is to stick with the basic vision of your business and not try to dominate a niche with little or no relevance to your core products and services. It makes more sense for a coffee shop to sell coffee cups, travel mugs and light fare than something like smartphone accessories, whereas a tech company probably wouldn’t see many sales from a line of specialty snacks.
Sticking to your niche while branching out in what you offer also maintains commonality among the types of customers you target, making marketing new releases easier. You don’t have to research a whole separate audience from the ground up or try to dominate additional channels to reach interested consumers. By tapping into your existing network, you can launch a complementary line and use the power of word-of-mouth advertising to spark broader interest.
Open another location.
Two can be better than one if you operate a brick-and-mortar store. This not only opens up opportunities to sell to an entirely new community but also may provide the chance to test out modifications of your products and services better suited to the demographics and culture of your second location.
Of course, adding another store means finding a suitable building, training managers, hiring new employees and getting yourself established, all of which require a considerable investment of resources. Confirming viability is important here, as well, since you don’t want to go through all the effort only to discover the audience you hoped to attract is nowhere to be found.
Partnering with other local business owners whose offerings complement yours can help attract customers to your new spot. People coming in to purchase products they already know they love will discover what you provide and leave with greater awareness of your brand.
If a second location isn’t feasible right now, you can still grab the attention of a wider audience by putting your products online. Adding a store to your website also provides more data about consumer shopping and buying habits, which you can use to inform decisions regarding future expansions.
There’s quite a bit to create an online store, and it’s a good idea to get help from your in-house IT team or experienced third-party services. You’ll need to select an e-commerce platform, create a product catalog and set up integrations with your payment processor, inventory tracking system and accounting program. It’s also necessary to work out the logistics of fulfillment and shipping. Doing all of this gives you the potential to reach customers and build brand awareness far beyond the confines of your physical location.
Get a handle on your new market.
After deciding which avenue you’d like to take with your expansion but before moving forward, you need to do some thorough research on the new target market. The process should be essentially the same as when you first started your business, so you can use the same principles to discover:
- Whether your product or service offers something these customers desire
- The needs, wants and shopping habits of target customers
- The degree of willingness to pay for what you provide
- What competitors are already doing
- How well similar businesses are faring
In addition to this research, talk to your current customers and people to whom you hope to bring your products and services. Find out from them personally what they like about your business if they already shop with you or what they expect from a company like yours if they don’t. Look at the perks and drawbacks of your offerings from their perspective, and use this feedback to conduct preliminary tests in your new market. Keep these tests simple and small in scale to prevent serious losses if the proposed expansion turns out to be a flop.
Create an actionable plan.
When you’re officially ready to move forward, it’s time to craft a detailed expansion plan. According to a survey by Business Plan Pro, 64 percent of business owners who started off with plans were able to grow their companies successfully, but only 43 percent of those without plans saw similar results. Your plan should include:
- How to reach customers in your new market
- Detailed information about the resources required to get established and move forward
- Short- and long-term goals with clear steps to reach bot
- Online and offline marketing campaign
Though you want to focus on positive outcomes, smart business owners also include strategies for getting out of new markets in the event of failure. This allows you to return to your original business structure with a minimum amount of loss.
Pitfalls to avoid as you expand.
Business owners make plenty of mistakes when targeting new markets, but you don’t have to fall into the same traps. Although there will always be some bumps along the road, using caution can help you avoid some of the major sources of trouble, such as:
- Losing sight of your company’s original purpose
- Rushing the expansion due to misplaced zeal or anxiety over missing opportunities
- Assuming the product model you use for your current audience will be a perfect fit for the new market
- Failing to conduct thorough market research
- Ignoring customer feedback
- Hiring new employees too quickly
- Hiring more employees than you really need
- Having no plan to handle setbacks encountered during the expansion process
Carefully evaluating a new market and being intentional in your planning are key ingredients in the recipe for success as you expand. When you have a full understanding of what you’re getting into and how to make your products and services work for the target audience, you can hit the ground running, persevere through the early stages of development and emerge as a successful player amidst the competition.