Looking for ways to expand your business but don’t want to risk doing something overly aggressive? You’re not alone! Many entrepreneurs focus on a slow and steady approach that limits risks, ensuring a runway for further growth. Luckily, there are several tried-and-true strategies that can help business owners scale up without overly investing too much money and time.
In this article, we’ll cover four low-risk expansion techniques to help get your company reach its new level with cost-effective applications. Whether you are diversifying your existing service/ offers, entering into a new market, increasing distribution channels or building operations teams—you’ll leave with an understanding of how best to expand within budget and navigate the challenging journey. So let’s start by looking at these four strategies now.
Strategic Planning
No matter how cliche this might sound, business owners often jump straight into business expansion opportunities without conducting strategic planning and risk losing tens of thousands of dollars due to their impulsiveness and lack of a tactical action plan. And the sad part is that when they get burnt during the process, they resent their business partner for not pulling their weight to keep the business afloat.
Don’t skip this process. You need to have an intense focus group meeting with your business partners and team members to address the questions of what, Where, How, and why. Consider joining the workshop and mastermind group to get your strategic planning done. It will save you the stress and loss of hard-earn thousands of dollars by acquiring strategies that mitigate your risks and avoiding unnecessary expenditures.
Simply investing a solid 50 hours of deep-dive planning & analysis with your team and partners about your expansion trajectory pathway is far more beneficial than a haphazard, close-door one-on-one discussion with your business partner(s) over the course of 6 months.
The point is to involve your key staff members and invite them to contribute. Your staff are the front line that deals with everyday operational challenges, workflow frustrations, and customer issues and will assist in shedding some light on your preconceived ideology.
Remember, not all business expansions are consistently profitable. It is best to speak to a business growth specialist. If you need a quick assessment to test your ideas, click here.
Business Assessments from $99 for start-up, Scale Up, or Exiting business owners.
Loan Vs Your Equity
Test the water with your equity before you use other’s people money.
Lenders, banks, and private equity may charge up to a 10% interest rate for business loans. Alternatively, you could consider Angel investors who may want a more significant share from you and may incline to micromanage you into a second-class citizen.
Either way, there is no easy path.
The problem with using others people’s money is that you don’t feel the pain. Your Ego might come into play by overspending, over-committing, and over-denying its profitable opportunities; hence, when you use other people’s money, it’s easy to be in denial and prolong the inevitable that the business isn’t profitable.
By the time you pull the plug to end the expansion program, your company might already accumulate more debts and interest than necessary. And if that is not your money and you happen to come across the wrong Investor, they may file a lawsuit against you, costing you even more to defend your case.
On the contrary, when you use your own money, it hurts when you are constantly at a loss, month after month. It will force you to become more practical, logical, and impartial when assessing the “opportunity” of the lifetime, especially when you start paying the bills, and ultimately give you the courage and confidence to pull the plug within a reasonable timeframe before the project begins to digest all your funds and equities.
Ensure the Value exceeds the price
Whether you are starting a new office (branching out) or introducing new products and services (P&S) to a new marketplace, you need to ensure the Value of your P&S exceeds the market price so that you can quickly support your business expansion. You need to charge a slightly lower price to get traffic, free awareness, and exposure from your customers.
I know it is tempting to charge the market rate on your existing model, but if you want to play it safe, it is best to price your P&S below its perceived VALUE to secure your market share – it is a temporary strategy.
Customers are always looking for Value, and if the price doesn’t justify their perceived Value, they will go elsewhere.
One way to ensure VALUE exceeds the price is to communicate with a 10X value proposition on all aspects of your business’s offers, services, and products. If you justify that the Value your customers get is 10X more than what they will pay, chances are they will buy from you.
Please note the 10X formula is a marketing concept. There is always an exception to this rule; sometimes a 3 – 5 – 6X may work as well when it comes to improving your conversion strategy. Applying this technique to your business might show consistent transactional growth.
Invest in Marketing
There are over 15 marketing planning and strategic tools that you can use to launch or expand your business to a new market. In our mastermind and quantum growth program, we help business owners go through a set of analytic and strategic planning tools to test market feasibility: we use tools such as the 7C compass model, the AIDA marketing model, Geographic market expansion, Value propositions, Content and digital marketing strategy, and market positioning statement, to ensure your strategic launch and expansion program is as profitable as it can be.
On top of that, you have to invest in paid ads (Facebook/Google Ads), website services, email marketing, and social media marketing.
If you have a Facebook page, Twitter account, or Instagram account, you should use all those community media to get the word out about your business. And if you don’t have an account yet? It’s easy to create one!
In fact, to play it safe, you can even use your social media to test the water before any launch or expansion: to see how receptive your customer base would respond when you mention your new office location (new branch) or introduce new products/ Services 12 months before the launch. To test the water on a new market, you can create an Ad campaign and attach a freebie to collect interest and prospects.
Summary
All in all, expanding a business doesn’t have to be expensive. However, it needs to be done with a strategic plan. Every progression carries risks and requires capital to sustain: outgoings, payroll, lease set-up costs, and other advisory costs to bridge the deal.
To expand your business successfully and get the most out of the endeavour, consider factoring equity financing, loan financing, and angel investors into your plan. Developing a pricing model that closely aligns with the value customers are receiving is also critical for success. Finally, don’t discount investing in marketing – how you present your new products and services makes a big difference.
If you’d like more tactics for expanding your business without breaking the bank, join our upcoming workshop. We will discuss investment strategies and other tips to make your expansion goal achievable without going overboard on costs.
