Expanding a business by tapping into new markets is a time-honoured strategy for boosting commercial fortunes and setting your company on the path to success and growth.
However, stepping into the unknown can be unsettling and risky. A lot of business owners and entrepreneurs are in the business they are in because they have experience and expertise in a particular field. They know their market, they know their customer base, they know how their competition operates (and how to maintain an edge).
However, knowledge and experience count for little if sales start to flatline or dwindle, customers ebb away and revenues fall. Or, as many businesses are experiencing at the moment, costs rise and you have little room for manoeuvre with your current commercial strategy.
There are times when change is necessary to adapt to changing circumstances and reshape your business so it is ready for future growth. Moving into new markets is one way of doing this. There are a number of different forms this can take. Expanding into new product lines or adjacent services, physically (or, these days, digitally) moving into new geographic markets, partnering with or taking over other businesses are all examples of market expansion strategies.
But how do you know when the time is right to take the plunge? Here are three signs that not only is your business ready for new market expansion, but the chances of success are high.
When customer loyalty is high, but you have little room to raise sales or margins
A lot of businesses find themselves in a position where a large proportion of their turnover comes from regular customers. It’s a good place to be. But it’s not always easy to increase sales volumes and/or turnover from a loyal majority of customers. You might have reached saturation point for how often most customers need or want your product or services. You may have already put up prices, or otherwise consider it too much of a risk to do again.
This is a good position from which to expand your product or service offer. Loyal customers who trust you as a brand are more likely to take up the new offer. And it provides an opportunity to increase turnover without having to drastically increase customer visits or prices.
When there is clear customer demand for something new
The key to making any kind of expansion into new markets successful is to do your market research. If you’re looking at what else you could offer a loyal customer base to raise average sale value, do the simple thing – ask them what they would like you to offer, and work out what has the most value to your business.
If you are considering moving into a new geographic market or targeting a new demographic, again, get as much insight as you can. Identify where your brand and services are most likely to have a strong appeal. When you spot a gap in the market, jump in to fill it.
When you have the financial capacity to take a risk
A lot of businesses start to look at new market expansion as a strategy to counter flagging fortunes. Which makes sense. But moving into a new market is more likely to be successful if you can do it from a position of strength, especially financially.
There is risk involved in changing your business model and operating in different ways. Entering new markets inevitably requires investment, be it in new products, new equipment and infrastructure, new premises or training for your people. You need the financial resilience to handle that investment – including if it doesn’t work out as planned.
Speak to an expert
With years of experience in guiding businesses through market expansions, we’re equipped to help you navigate uncharted waters. Our tailored strategies are designed to maximise your chances of success, minimise risks, and accelerate growth.
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