We had such an enthusiastic response to our Opportunity v Risk blog that we’ve written a more detailed follow-up on key considerations for when you’re looking to expand your business. Check them out below, and let us know your thoughts or other subjects you’d like us to tackle!
- Assess the opportunity. What is the market opportunity for your business? Is it a profitability or a land-grab play? Who are the key competitors and what are they doing well? If there is already a competitor in the market you must be both cheaper and better to create a tsunami effect.
- Know and LOVE thy customer! Don’t assume that you know the needs from a potential customer in a new market. Undertake appropriate market research (including survey or analysis work where required) to gain clarity from your new and local customer base.
- Understand the funding requirements. How much will it cost to launch your business? How long will it take before you become cashflow neutral (or even positive)? How will you fund your expansion? And how will you hold yourself and the business to account through this process?
- Identify key people. Who is instrumental in making the expansion a success? Will it take their focus away from other parts of the business? How will you mitigate this?
- Protect your core business. If a significant portion of your business focus is reallocated from your current business to expansion you need to manage the risk within your current business. Who in the current business can ensure that you continue to meet targets?
- Engage experienced advisors. When expanding in different markets it’s important to have the connections in place to make the expansion a success. Invest in good quality advisors who have had success in assisting companies to expand. Don’t be afraid to put them on the spot and ask them about how they can help grow your business!
- Masterplan & metrics. The old adage of if you fail to plan, you plan to fail holds true. Make sure that you have a masterplan that is underpinned by clear metrics for how to assess the business performance and any critical milestones.
- Investors & shareholders. If you have a current investor base, manage expectations and have realistic targets and milestones. Ensure that you are fully transparent with them re any expansion risks and ask for their advice/help/support to grow your business. If you don’t currently have investors in the business, make sure that you assess the right time to bring new investors into the business for growth purposes and ensure that you have the appropriate documentation in place to reflect any intention agreed.
- Don’t forget ESG in 2020! Environmental, social and governance aspects of expansion are critical. If you are producing your product locally and suddenly start exporting you should understand the environmental impact of this and be prepared to think of long-term solutions to mitigate this. Socially conscious consumers care about both governance and environmental aspects of brands – now more than ever before!
- Expanding overseas? Think about the following!
- Managing time differences (this should not be underestimated)
- Exchange rates and transfer pricing
- Import duties
- IP protection
… and that’s without even getting into language and culture differences. Keep an eye out, that’s a whole post in itself!