Some businesses are able to grow and prosper by outperforming their competition in a local niche market, or within a specific region. But the majority of businesses look to expand into new markets to grow their business and one of the most common ways of doing that is to expand geographically.
If you decide you want to grow your business through geographic expansion, you should start small. Focus where your expertise is. For example, if you currently wrong a coffee shop in a rural area offering good old fashion coffee (no fancy drinks) and plenty of homemade desserts like apple pie, you may be tempted to expand into the city. This may not be a wise move as the city crowd is looking for fancy coffee drinks and healthy food choices. Instead, you would be better off expanding into another rural market where you know your business concept works.
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Whatever your business plan is, when you are expanding your market into another geographic area move slow. Before you expand:
- Develop guidelines, standards, and processes to make start-up easier no matter where that new location is.
- Consider the impact the expansion into a new geographic area will have on your administrative staff and your resources. Licenses, permits, accounting systems, will all be impacted by your expansion.
- Assess how the geographic expansion will affect your revenues and your profit margin. Earning more revenue does not always translate to more profits. You may incur significantly higher operating costs, which could eat up additional revenues that were generated.
- Do your market research for the new location and make sure you do competitive analysis as well. You need to know if you can effectively compete in the new market.
- Consider the lease expensive way to enter into the new geographic expansion.
Expanding Your Customer Base
By expanding into a new geographic market, you expand your customer base. However, that doesn’t mean you have to actually setup in the new location. Many times you can grow your business in a new geographic area by simply targeting customers in the area.
Customer expansion can be accomplished by taking your business to the internet. It’s easy to market customers and service them online. However, competing in this marketplace can be a little tougher because of the amount of competition. If your products differentiate your business it will make it easier.
Expanding into a new geographic area may take time. Be patient. New businesses take time to grow and the same applies when you move into a new geographic market.
