Five ways to expand your business

If you’ve nurtured your own business from the seed of an idea to a successful enterprise, you know how much hard work and dedication it takes. And now you’re thinking of expanding it? Kudos to you, intrepid entrepreneur. We’re here to support you on your restless quest to conquer the business world. If you’re exploring your options to expand this year, here are five opportunities to get excited about.

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Acquiring another business

One way to grow your business is to acquire and integrate another business into yours. Usually this will be a smaller business that complements and strengthens your position in the market. There are two main ways to do this: horizontal and vertical integration.

Horizontal integration

Horizontal integration is when you acquire a business operating at the same level in the same sector. Like when one hotel chain takes over another. Or Facebook buys up the latest social media app. It:

  • increases your market share
  • eliminates some of the competition
  • adds new products or services to your business
  • gets you into new market
  • increases your business size (which tends to increase your stability and delivers economies of scale)

Vertical integration

Vertical integration is when you buy a business above or below you in the supply chain. For example, a business that supplies sandwiches to schools and offices might decide to take over the bakery that provides their bread, or the delivery service that shuttles their sarnies to schools.

Vertical integration:

  • diversifies your offer
  • provides access to new clients and markets
  • improves the efficiency and reliability of your supply chain
  • increases your business size (which tends to increase your stability and delivers economies of scale)

Before you acquire another business, you’ll need to do a lot of research. How will acquiring this business strengthen yours? Is the business in a strong financial position? Do they have a good client base and stable staffing? Weigh up the benefits to your business.

Franchising your business

If you’ve established a success brand and business model, you could consider franchising it. This is when you license your business model and brand to other people, so they can run their own version of your business.

They’ll pay you an initial franchise fee to use your business model as well as a share of their profits. Some of the most world’s best-known brands are franchises, like McDonalds and Costa Coffee.

Establishing your business as a franchise can be expensive and there’s legal stuff to sort out – like registering your trademarks and drawing up a franchise agreement.

But once you’ve got that sorted, it can be a great way to grow your business. And there’s a common misconception that it’s just for big firms… but that’s not the case, with everything from kids swimming lessons to dog walking available in the franchise market.

You have to show that your business model is replicable and that you’ve got the strategy and resources in place to support franchisees when they start up their business.

There are three main elements to franchising a business:

  • franchise sales – how you’ll find people who want to become franchisees, what benefits you can offer
  • franchisee support – how you’ll onboard franchisees and get them up-and-running quickly
  • on-going support and development – how you’ll maintain quality, control and growth of your business when you have multiple franchises

The British Franchise Association has lots of useful information for people considering franchising their business.

Exporting to overseas markets

Even in an uncertain political climate, exporting your products represent an excellent opportunity for growth.

Navigating the national and international legalities of exporting products can be time consuming and complex. Luckily there’s plenty of support out there to help, particularly from the Department of International Trade, who are keen to encourage exports.

They can help you plan your international expansion, find clients overseas and put you in touch with an international trade adviser.

Before you seriously consider exporting, you should consider:

  • whether there is demand for your product overseas and how you could find that out
  • whether your product is compliant with the legal requirements of other countries
  • what licenses you might require to sell overseas
  • the logistics of scaling up production and exporting
  • whether you’ll continue to manufacture in this country or invest in manufacturing abroad
  • the impact of exchange rates on your potential costs and profits

Niche-ing down

When you’re thinking about growing your business, it might seem counterproductive to make your market smaller. But dominating a niche market can be a great strategy for growth.

Think about the services you currently offer. Is there any subset of your market that is under-served by suppliers? If you fill that gap, you might find it highly profitable.

Claiming a niche market can:

  • make you more attractive to customers in that market, because you’re the industry expert
  • allow you to charge more, because of your expertise and the value that adds to customers

Niche markets have less competition and you can reach them more easily through targeted marketing, outreach and word-of-mouth recommendations.

For example, if you are a flooring supplier, you could you specialise in protective surfaces for educational establishments, or comfort flooring for factories where people stand all day. You could charge a premium for these specialist products and installation expertise.

Expanding online

If you haven’t already got an online presence, this could be the key to unlocking the potential of your business. Having a website – whether it’s just designed to get your name out there or has a full ecommerce function – can open you up to all kinds of opportunities.

If you run a physical shop – or chain of stores – offering your products online literally makes the whole world your marketplace. Whether it is posting out products to a customer who’s just too far away to shop with you in person, to sending something to the other side of the world, expanding your shop beyond your immediate local environment is guaranteed to grow your business.

If you’re a service-based business, you could develop a service delivered online. For example, a plumbing company could offer online consultations for homeowners who have problems with their pipes, whilst a celebration cake company could offer online webinars to train people in icing skills. There are so many opportunities afforded by digital technology. You just need to think creatively and meet a need.

Even if you’re not ready to offer new online products or services, marketing yourself online is essential.

If you’ve got 2020 earmarked for expansion, check out our article on finance options to grow your business.

Want to take our a business growth loan? Our growth loan calculator will show you how much you can borrow.