Once you have achieved a certain level of success with your business. It is time to start thinking about expanding it and exploring new markets. When it comes to expanding their businesses, it is what a lot of entrepreneurs aspire to do and it is something that a lot of them are fueled by.Here are some of the advantages of expanding your business.
But what a lot of people don’t understand is that expanding your business is not something that you should do immediately. And it shouldn’t be taken lightly. Despite some drawbacks that people might experience along the way. It is something that has a lot of advantages, and here are some of the best ones.
Attracts New Customers
One of the main reasons why a lot of entrepreneurs decide it is time to start expanding their business is because this will reach out to a completely new crowd. Even though expanding means that you already have a well-established customer base, adding new and fresh ideas will ensure that you are reaching out of the safe zone of customers and gaining new ones.
When you feel that it is time to tap into the new zones, make sure that you are still having those products that your existing customer base loves as you don’t want to risk losing them. Always make sure that you are adding something that is just as appealing to them as it is to potential new ones.
Economies of Scale
Another very amazing benefit of expanding your business is economies of scale. That is mainly because when you are growing your business you can hire more condor supplies which will end up providing multiple discounts as you are needing bigger quantities of supplies you are already ordering. 90 percent of vendors and suppliers will have better deals when you are ordering bigger quantities.
Having a bigger business means that you will be able to purchase better and larger equipment that will result in better quality products and faster operation time. In the long run, that means that you are playing less to get more which results in more money you can invest back in your company creating more profit.
Establishes Multiple Revenue Streams
Possibly one of the biggest advantages of growing your business is that it will give you the opportunity to offer a much bigger range of products and services you are already offering. In the long run, that means that you are expanding your revenue streams which will all result in an increment of revenue. For instance, if you are a baker and your bakery specializes in breakfast foods, when you add a brunch menu you will still use that you are satisfying your current customers but you will gain new ones by implementing something new.
Gives You a Chance to Reposition
As we have mentioned above, expanding means that you can add new products but it also means that you will get the chance to reposition. There is no better tune to boost your visibility than relaunching or repositioning your business or even opening a franchise business. Making even one smaller change will help you gain customers and even reach a whole new market.
It Builds Brand Identity
What better time to work on your brand identity than when expanding it? The more locations that you are having, the larger crowd of people you will be exposing your business to. Expanding the business is critical if you want to work on your identity. But not only that, it can help you stand out from all your competition and cause more sales. You can turn your small business into a much larger entity and appeal to different target audiences.
Increases Your Investment Appeal
Adding that second location will definitely make a notable difference when it comes to your investment appeal. When you are looking for a way of attracting venture capitalists. And taking advantage of a thriving business, and having more than one location is the key to success. But make sure that you have enough revenue.
That you can support a second operation as well as have the right marketing strategies in place. Even though it might sound like a chicken and the egg situation to a lot of small business owners. Making sure that you can support the second location before opening it to create more revenue is crucial when it comes to successful business expansion.
Better Distributes Risk
It’s never the right option to have all your eggs in one basket, and opening that new location can help you decrease some of the common risks. When you are renting your store’s space, your business will be heavily impacted by your landlord’s decisions.
For instance, if you have been operating in the same location for several years and the building gets sold, you can’t let something like that destroy your company as you will have to start in a whole new location. But if you already have the second location, your business won’t have to suffer. This way you will be able to reduce the risk of losing or heavily damaging your well-running business.
When Is The Right Time To Expand?
The most important thing that will ensure that you are making the right decision of expanding the business is by knowing when the right time is. For every single business, that time will be different. You have to ensure that you are following the data that is suggesting that your business is self-sustaining. And that the growth path is showing it is time to expand.
One of the key findings that are showing that you are ready to expand is. Having increased demands for your products. Stable profits over the last couple of years as well as having the financial resources as well as personnel. And materials to make that happen. Another great sign that will show you that you are ready to expand is gaining a serious investor that will help that happen in a safe way.
That will only improve your business and not damage it in any aspect. But if you are deciding to go with an investor. It is crucial that you are considering the advantages and disadvantages of it as they will typically want to have equal ownership.
Something that is crucial is to understand that you should never expand your business just for the sake of expanding. Always ensure that you are expanding your business if you are sure that it can support the growth and not cause any damage to it.
Make sure that you are counseling professionals and considering their options before taking a leap of faith. Expanding your business when it’s not the right time is a costly mistake. And can cause your business to fail completely. Before committing to anything make sure that you are determining how long it would take.
For you to start generating any profit from the new location as well as calculating the potential income. And measuring it against the capital expenditure and adding a little over that just to be sure. Once you have created all the projections. Then you will be able to decide if expanding your business is the right decision. Or if you should wait for a couple of years more.