Expanding into a new market can be an effective way to leverage your core business…
What Type of Growth Model Is Right for Your Expanding Business?
Business growth happens sooner or later if you do things the right way.
Small Businesses grow steadily in the beginning, but eventually, you’ll have to consider your options for business expansion. Once your company matures enough, you have to choose the right growth model in order to develop your business further. There are many options available, but not every option is suited for your business.
That’s why it’s of the utmost importance to consider your choices wisely and familiarise yourself with advantages and disadvantages of each model. That way, you’ll be able to determine the best course of action for your company’s growth.
Do be careful, because the wrong choice may easily cause your entire company to fail.
That being said, here are few types of growth models to help you decide which model is the right for your expanding business:
Many Small Businesses operate mostly on their local market until they start to grow. In most cases, business owners choose market penetration as their growth model to help them advance further. That means that your business will enter the market that has established and well-funded competitors. In order to succeed, your business must be able to differentiate itself from other companies and have a strategy in place that will allow it to effectively reach its target audience.
Providing unique value can vastly improve your chances of gaining a competitive advantage on the market. For example, setting the prices the right way, offering exceptional customer experience, having a unique product or service quality and so on.
Penetrating a market also means being able to withstand competition and reach success regardless of the challenges your company has to face.
Choosing a franchise model.
One of the growth models many business owners opt for is franchising. Instead of attempting to reach a new market on your own or expand to another location, you simply buy yourself a way into an already developed business model. Franchise businesses are endorsed by a trademark or brand, which means they’re responsible for each of their franchising businesses.
However, before you venture any further, you should try to find a detailed answer to the question – how does a franchise work? Once you accomplish this, you can familiarise yourself with this model, in order to grow your business more efficiently.
Basically, a brand or a franchisor, in this case, supports you with the funds, staff and materials needed to open up a store. They also provide you with marketing strategies and campaigns while you have access to their already-established consumer base.
Expanding to a global market is also a growth model you should consider for your business. Many businesses these days, such as retail and e-commerce stores operate on the global market.
However, as lucrative this expansion may be, you should take the time to consider the numerous challenges concerning international trade. For instance, you must be financially prepared to face the global market. The main reason is that it oftentimes takes companies around 10 years to reach a +1% return on assets (ROA).
Also, you should familiarise yourself with the foreign market you wish to expand to, in order to avoid cultural and language barriers. Moreover, you’ll simply need a strong logistics plan and strategy to ensure a seamless import or export of goods overseas.
That also includes familiarising yourself with global laws, policies, rules and regulations, as well as checking with the freight forwarding service to help you determine proper packaging and documentation for your products.
Another growth model worth considering is niche markets. Niche markets represent a unique consumer base with specific needs. There are billions of consumers nowadays, and not everyone can find what they’re looking for or what they need for that matter.
These consumers belong to a niche, and they purchase regular products or services because they have no other options on the market. Large companies oftentimes don’t bother with niche consumers. Instead, they build a product, and niche consumers buy it due to lack of alternatives on the market.
Serving a niche market can be a major growth opportunity and a significant competitive advantage. You should consider developing a new product or service for niche consumers or adding a product feature that will meet their needs. That way an entire consumer base from the niche will become your consumer base.
Providing the solution to niche consumers will earn you a fair share of the market and make your business a pioneer. Serving a niche market can help your business grow without being hindered by competitors.
There are numerous growth models for expanding businesses, but not every model is ideal for your situation. Your business must be able to scale properly, in order for it to succeed in the market.
That’s why it’s very important to choose the right growth model and allow your business to grow seamlessly.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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