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Planning Your Marketing Strategy

Grow Your Small Business into New Markets

Grow Your Small Business into New Markets

As your small business grows, branching out into new markets makes sense. Most businesses seek to expand into additional markets to leverage success, enjoy economies of scale, grow revenues and products, and create a more stable business model.

If you’re considering expanding or targeting new territories or new customers, you’ve likely enjoyed success in your current market. You know your existing market and customers—and how to serve both.

Entering a new market is less comfortable. In effect, you must prove yourself to an entirely different customer pool. On the other hand, you don’t have to reinvent the wheel. You aim to determine ways to extend your current operation into new markets.

Let’s look at two new market efforts: geographic expansion and customer expansion.

Geographic Expansion

Geographic expansion is the most common way to enter new markets. This includes taking online sales. By definition, online sales allow you to serve the territory of your choice.

If you decide to expand geographically, start small. Stick to what you know well. If you run a restaurant in a relatively small town, choose another small town with similar demographics, customer profiles, and household incomes.

It may be tempting to transplant a successful operation to an area with a high volume of potential customers, but this strategy can also be risky. Sticking to markets with similar characteristics limits the risk of the unknown. It also allows running your new operation using similar practices and procedures.

In short, the closer a new market is to what you already know, the greater your chances for success. While you may want to become an overnight national brand, take small steps and leverage each achievement. The same applies to e-commerce; marketing to a worldwide audience can be expensive.

Before you expand, consider the following:

  • Ensure you develop guidelines, processes, and service standards so that start-up is more straightforward and all locations operate similarly. Building a brand requires delivering the same customer experience at each location.
  • Consider the impact on administrative tasks and costs. Calculate any needs for additional administrative staffing and resources. Is your accounting system set up to handle multiple locations efficiently? Refrain from focusing on the costs of opening the new location without considering the impact on your existing businesses.
  • Research what licenses and permits you might need. The requirements and process might vary by location.
  • Conduct market research and a competitive analysis in the new location. Determine if there are differences you must adapt to compete effectively. Decide how you can differentiate your business from existing competitors in the area.
  • Assess the effect on current revenues and profits. Evaluate if the new location will draw business away from your existing locations.
  • Consider ways to cut costs on entering the market. For example, if you open a new retail location, you may not need to stock as much inventory as your first location. Utilizing ideas like inventory sharing across multiple locations or slowly expanding your product offerings can be cost-saving strategies.

Customer Expansion

Expanding your business doesn’t always require setting up new locations. You can grow your business by targeting new customer segments in your existing territory.

Start by evaluating current customers. Determine what products or services they want and the needs those products and services meet. Reflect on the other customer segments that would enjoy similar benefits.

Brainstorm ways you can adapt to meet the needs of existing and new customers. For example, if you provide heating and cooling services for residential customers, could you also offer emergency services? You could also expand to serving small business owners who feel the cost of using industrial-level service providers is too high.

The key is to change your offerings to keep your customers and appeal to potential customers. Then, change your operations and systems to provide the new service profitably.

You can also achieve customer expansion by taking your business online. While it’s relatively easy to market and serve new customers in this environment, competition is stiff. Your products and services must be differentiated, or your business will disappear into the online clutter. Consider how you can meet customer needs better, faster, or less expensively.

Before you expand, reflect on the following:

  • Examine your current operations. Think about why you are or aren’t successful. Determine what key factors play into your success rate and how you can leverage or adapt them to service a new customer base.
  • Consider your target customers’ profiles and demographics. Consider how they might be different from your current customer demographics. If you find differences, evaluate how this might affect their needs and your ability to meet and market to these new customers.
  • Evaluate your competition currently servicing those customers. What are the competition’s strengths and weaknesses? Decide how you will differentiate yourself and compete. Customers need reasons to switch. Make sure you give them those reasons.

Remember that expansion, whether geographically or into new customer bases, may take time to bear fruit. Most new businesses start slowly. The same applies to new locations or product or service campaigns targeting different customers. Monitor the results and adapt quickly. In time, you will know your new market, new customers, and existing ones.

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