A Look at Different Types of Small Business Expansion and their Benefits
The main purpose of a small business is to create revenues, and then to grow in order to make even more, however under the general umbrella of “growth” there are many distinct ways to expand a small business. Here is a look at a few of the most common and some of their benefits.
Purchasing equipment or inventory. Financing new equipment or the acquisition of new inventory allows a business to grow thanks to the added potential to create revenues contributed by the purchased items. Depending on the size of the items, the complexity of their use, and how time consuming they are to manage, you may need to hire new staff in order to operate your new machinery or keep track of the inventory. This type of business expansion is generally a response to already present demand, and since costs can only be recouped by additional business, it may be better to avoid investing in too much inventory or production capacity unless there is a clear need on the part of your clients. The major benefits of this type of expansion are that you can take on more jobs and new clients with confidence knowing you can handle what they need.
Expanding your staff. After you have put in the effort to retain your employees and provide them with training, you may find that they are ready to start managing in their own right. Hiring new employees and promoting your old ones to management roles shares the same benefits as purchasing new equipment, and one may in fact follow the other. As with expanding production through other means, you should verify that you are able to recoup the costs of hiring with a clear demand.
Franchising/ opening a new location. These moves lie on the more advanced end of the spectrum, with opening a new location potentially being easier to manage than franchising, considering the large amounts of legal paperwork and standardization of processes that go in to creating the structures to support it. While opening a new location gives you the ability to manage it in a more hands on way, it also divides your time, whereas once you have set up a franchise, other entrepreneurs will be able to do most of the managing work for you. Small business owners may consider opening secondary locations in order to test the waters for franchising, seeing if the demand for their product is able to be sustained.
Renovating or upgrading existing business assets. Sometimes, what a business owner already has works well, but it could still work better. In this case, they may wish to invest in updating their technology, for example investing in CRM tools that can keep their customers happier, or making their location look better to attract new business. The benefit of this type of growth is that it takes what you already have and what is already working and injects it with extra momentum, although the danger remains that renovation will take away the special quality of your business just as it is.
Re-branding. If you choose to update your brand, you must be very sure that it is the right move as drastically changing the appearance or message of your brand runs the risk of having your customers no longer recognize you, or even worse, become alienated by the change. Taking the temperature of your target demographic through running some focus groups and market research is essential before trying this. That being said, if done correctly, you can increase your engagement and appeal to a broader (or more targeted) group of customers with a well done re-branding.
Photo Credit to Wayne National Forest on Flickr