There are times when a business has become so big that it needs to reach other markets. Basically, business expansion is the stage where the business has reached the peak of maximum achievement and is looking for new space to grow further.
There are several forms of expansion, the easiest example is opening a new branch or representative office in another location. However, there are many other examples of business expansion, including:
- Adding more sales and marketing staff
- Creating new products and entering new markets
- Join another business, or buy another business
- Expanding digital marketing network
Why Do You Need to Do Business Expansion?
Business expansion brings many benefits to your business if done at the right time and with the right method. These benefits include:
- Expand your business influence on the market
- Potential to reduce operational and production costs
- The addition of product types can minimize the impact on the company overcoming errors in determining business decisions from one product
- Increase the number of new customers
- Expanding revenue sources, so that the company becomes more secure and stable
As with any business decision, there is another side to business expansion that needs to be considered. These factors must be considered before expanding, so as not to fail and actually have a negative impact on existing businesses.
Need for additional capital
For example, you want to recruit more sales. You certainly have to increase the budget for the salaries and facilities of these new staff.
Make sure that you have a mature plan and strategy, so that the addition of these employees can be accompanied by a significant increase in revenue as well. Do not let the company’s finances decline due to this decision.
Likewise with the addition of store locations, or opening a new representative office. Collect data and analyze it first, how big the business potential is in the new area.
Loss of control of the system due to being overwhelmed with increasing loads
The addition of employees or business locations can make the old system no longer usable. The reason is, at this point, there are changes that make the system no longer in sync and there is a risk of making operations go out of control.
Before expanding your business, make a mature operational system first. For example, with different office locations, supervision is certainly more difficult. With a well-organized operational system, you can keep monitoring easy.
Decrease in quality and productivity
In addition to increasing the workload, business expansion also risks bringing down quality and productivity. Even if you bring in a lot of new customers, if your resources are not ready, it will cause a lot of problems due to lack of resources.
The risk of decreased productivity can occur if the monitoring system has not adapted to new conditions. Lack of direction and supervision can make employee productivity levels decrease.
Therefore, prepare in advance the strategies and systems that have been adapted to the new business conditions.
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Then, when is the right time to do business expansion?
Although it takes a lot of preparation and more hard work, as a businessman, it is an honor to be able to expand. You must be sensitive and able to make decisions when business expansion is the right step to take.
So, when does your business need to expand?
Business get additional capital
If an investor is interested in investing in your business, it means he sees that your business has potential. You can take advantage of this additional capital to expand.
Do research with the right data and analysis, what is the most appropriate form of business expansion, then don’t forget to consider the variables.
For example, the chosen form of business expansion is to open a new branch. So, you have to choose the best location, and make a development plan with a mature system.
Your cash flow and profits are in a strong position for a long time
Positive cash flow means that the business is in a healthy state. Staying in your comfort zone all the time can also be dangerous for business continuity.
If your business has been in a ‘safe’ position for a long time, it’s time to develop and expand your business to make it even bigger.
Have resources that can be utilized
Maybe you have an empty property. Or have a network of acquaintances who have the potential to become investors. In fact, you may even see other businesses that have potential, an it is in line with your current business.
Sensitivity to opportunities is the hallmark of a good businessman. You must be able to analyze the situation around you, and take the opportunity that comes at the right time.
Increased sales and number of customers
The most important reason is the increase in the number of customers and the level of sales. You need to ensure that all customers can be served as to generate maximum profit.
Increased production or service capacity must be carried out when there is an increase in market demand. Of course, no businessman wants to lose customers.
Do you need and are ready to expand your business?