Planning expansion and growth can be an exciting milestone for business. While development often represents a tremendous opportunity for a company, the process is not without potential hazards and pitfalls.
In this post, we’ll offer some key considerations and practical tips to help you expand on sound footing.
Ensure Expansion Is The Right Move
Before “pulling the trigger” on expansion, consider the following factors and questions to ensure it is the correct course of action for your company.
Revisit Your Current Business Model To Determine If/How An Expansion Fits.
A common pitfall for businesses is the idea that “if it’s working here, it will work there too.” Just because you are successful at one location or market does not necessarily mean that a new location or market will enjoy the same level of success. It is crucial to understand what might be different, not just what may be the same. Understanding what is different in a space you are less familiar with can be challenging.
Define And Evaluate Your Target Market For Expansion.
The decision to expand should be an informed one, and researching your target market is crucial. Understanding trends, customer behavior and buying decisions within your demographic target market will help you write the recipe for success. There are a numb resources that can be sued to understand new markets — market research firms, vendors, customers and sales people working in these markets, as examples.
Management And Operations Are A Key Consideration.
If you are currently “steering the ship” at one location or in one market, will the management of a second look the same? Don’t become blinded by the shininess of a new opportunity, and be mindful not to overlook warning signs and areas of concern. Components such as company culture, management roles, and scalability won’t automatically transfer to a new situation. Evaluating the assets of a current business and considering how to implement similar features in another can spell the difference between success and ruin.
Adequate financing is critical to a successful expansion. Forecasting should be one of the first preparatory steps in business development. Preparing projections is very helpful in clarifying an opportunity. It forces the business leader to consider things like market share, competition, costs to execute, required effort and potential risks.
The Question Of Financing
There are a staggering number of financing options available to businesses looking to expand. Which route is best will depend on an individual company and its objectives.
Depending on your business situation, one might chose to bring in new investors, finance the opportunity with all debt or inject additional personal capital into the business. Each of these financing options have many different potential variances. For example, on the debt side alone, there are term loans, lines of credit, SBA loans, asset backed loans, equipment financing and invoice financing, among many others. It is important that the business selects the right type of financing to allow it the flexibility it needs to succeed.
Pick the Right PartnersA solid financial footing is imperative to a successful expansion effort. Working with the right partners can make your journey much easier and increase your likelihood of success when taking on a new opportunity. Seeking experienced business legal counsel, market research firms, banking partners and financial advisers can sometimes make the difference between success and failure.
Leveraging outside companies, such as Lauber Business Partners, to utilize a Fractional CFO or an Interim Consulting Service can bring a high standard of expertise focus to strategic priorities.
A Fractional CFO or interim consulting resources can bring expert skills and useful experience to guide you through the expansion process without having to support the salary of a full-time CFO.
Many times expansion taxes a business’ resources. Having dedicated resources, often for a finite period of time, can allow an organization to give an initiative the focused attention it deserves, while not impacting the day-to-day resources required to run the business.
Your Partner In Expansion
When considering expansion, numerous challenges and opportunities will appear. How you plan to address those challenges and capitalize on key opportunities will not only determine whether your development ignites but also its later success.
At Lauber Business Partners, we know business and we want to see your expansion succeed. Contact us today to learn more about our team of experts and comprehensive offerings that can be customized to your growth scenario.