After mastering the dos and don’ts of starting a business, it’s time to focus on growth. To enjoy the benefits of expanding your business, you need to think strategically.
In this article, we’re going to cover five mistakes to avoid when expanding your business.
1. Not Doing Market Research
Seeing your business grow is an excellent feeling. Naturally, success leads to ideas of expansion.
Business growth is essential, or otherwise, your business might be going south. But before you take the expansion leap of faith, start with market research.
First, analyze what you’ve done well so you can scale that to another territory. Then, take a look at the challenges you’ve had and note it all down.
Next, start researching the market in your niche. The goal is to discover:
- Market size and demand – You need to determine how high the demand for your service is. Then, explore the market potential. Learning these two things will reveal whether expansion is a smart move for your business.
- Competitor analysis – No matter how big the market is, you’ll find it hard to reach the top if the market is saturated. Check out how many companies are offering products or services similar to yours. See what they are offering and whether you can offer more to customers.
- Pricing – Check how competitors are pricing their products, and consider if you can match their prices.
- Target customer analysis – Who is your target audience? How old are they? How much do they earn? Find the answers to these questions to understand your potential customers better.
- Site selection – Once you know who your customers are, learn where they live, work, and shop. You can then plan how to expand your business accordingly.
One of the best ways to conduct this research is through the Arkansas Small Business and Technology Center. Customized research is available to our consulting clients free of charge.
2. Forgetting to Plan a Customer Retention Strategy
Creating a community of returning customers is a sturdy foundation of all successful businesses. While reaching out to new prospects, don’t forget to focus on keeping your existing customers.
It’s much easier and cheaper to keep a customer than to get a new one. Therefore, to ensure a stable business expansion, create a thorough plan for retention.
Here are a few ideas:
- Provide outstanding customer service – Great customer service is more than providing excellent customer support. It involves transparency, user-friendliness, polite communication at all times, and more. Make your customers’ experience flawless, and they’ll return in the future.
- Deliver excellent product quality – Your product’s quality speaks more than all your marketing stories. If you meet your customers’ needs, they’ll gladly come back to work with you again.
- Ask for feedback – Don’t shy away from requesting feedback from your customers. You’ll learn how you can improve, especially from negative feedback. Focus on customers you’ve lost and find out why they left.
- Set up a loyalty program – Loyalty programs are essential. They create plenty of incentives for customers, which then motivates them to come back to your brand. Check your business model and evaluate how you can create a loyalty program that works for everyone.
- Engage on social media – Be active on social media, which billions of potential customers use daily. Reply to any mentions and share them with the rest of your following. It’ll create a social media community around your business.
These steps help a business steadily grow over time. The bonus is that you’ll create a brand identity and garner some reputation in the process.
3. Not Tracking Costs
High revenues can cause business owners to overestimate their expansion potential. No matter how much you’re making, what are you spending?
Start by figuring your base business costs. Calculate all your monthly expenses. Next, make sure that you have enough saved up to cover those costs for at least a year. If you do this, you’re ensuring that your business can keep running and generating revenue.
Now, it’s time to set a realistic budget of how much money you’re looking to invest in your expansion. After creating a budget, do your best not to exceed it. Take notes of all your business inventory and track all the costs related to it. Minimize equipment expenditures you’re not going to need.
You’ll be able to keep everything in check by setting up an expense monitoring plan. Your ASBTDC consultant can help with cash flow analysis, budgeting and financial projections. Take some time to look at your numbers, then stick with the pre-set budgets.
4. Limiting to a Single Niche
Conquering a specific niche, or target, is priority number one. However, as time goes by, you’ll reach the maximum potential of the market.
The good news is that each niche is closely related to others. It might be a good idea to explore your options and build on top of your current success.
Remember, think of branching out in a different niche only after successfully conquering the current one.
5. Having No Online Marketing Strategy
Setting up a marketing strategy is essential before a business expansion. Unlike the past when you’ve had to invest heavily in marketing to stay relevant, doing that now is much more affordable.
Types of online marketing include:
- Content marketing
- Email marketing
- Social media marketing
- Influencer marketing
- Video marketing
Each of these is very affordable but also effective. All of these methods can grow your business organically. If you want to speed up the growth process, you’ll have to invest in ads on various platforms.
Create a strategy, build up your online following, and share your expansion news with your community.
Concluding Thoughts
Do you need any help with growing your business? Are you ready to add another location, hire employees, or expand your services? Reach out to ASBTDC. We’re eager to help you on your business growth plan.