5 Methods of Small Business Expansion



Posted on Wednesday 14th of May 2014 by
Manish Khanna

In such a competitive business world businesses are constantly expanding and improving their business. Businesses today are either expanding or failing, yet some business owners do not want the hassle of expanding their business. Or they sell their expanding business to avoid such a hassle. But expansion is not something someone should run from, expansion can be very beneficial and with current available resources it can be very easy and achievable. But it is still something a business should not just jump into without heavy consideration of the options. Not all may be right for your business at its current level. It is also recommended to ask yourself a few questions about your business before giving the thumbs up to expansion.

  • Will I truly benefit from expanding?
  • Will expansion result in any cost advantages for your business?
  • Will expansion expose you to new customers?
  • Will your existing customers remain loyal through the process?
  • Can I afford to expand the business?




When considering expanding you also have to consider yourself in the equation. Will expanding bring unavoidable stress into your life that could potentially affect your ability to successfully operate the current business and therefore the new expansion? This has to also be calculated because if you can’t perform to the best of your ability neither can your business. You truly need to analyse your business and its current standing to gauge if expanding your business is the correct move. And finally the last question you need to ask is; what type of expansion is right for me?

1. Target Different Industries or Vertical Marketing

Vertical Marketing is the expansion of a business by selling the same product/service across different industry sectors. By using this type of marketing strategy, you can expand your company by entering new markets with a lower risk value. When targeting a new market a lot of research and planning is involved before it is carried out. This is mainly a researching exercise to identify where your product fits into the market sector and what solution it fills to help design and product marketing and sales material to help you can sell your product/service in this new industry.

Here is a basic outline of what steps you need to take;

    • Define your new target market(s)
    • Do your market research
    • Give the thumbs up for that market or look for another
    • Create strategic plan to enter that market

When entering a new market it is recommended that it doesn’t force more than a 10% change in the company’s current business model and product/service. This statistic usually means there is a good alignment of existing resources. If it does require more than a 10% change, it is going to require a pretty heavy cost-benefit analysis.

2. Diversification of Products/Service or Horizontal Marketing


Diversification or Horizontal Marketing is expansion through the act of introducing variety of products/services to the same industry/marketing sector. Companies who diversify do it for a lot of different reasons, in some cases it is a survival strategy for businesses suffering in an over-competitive market. But it can also be an expansion strategy and a process of being identified a specialist in the field and a means of the ability to use multiple products/services to gain clients and improve sales at the same time. An example could be if your business provides products/services to the medical industry. The hospital which they are targeting may already have a contract for a specific product/service, but by having multiple products and services in the industry, they can use a lower cost product/service to make a sale and start the relationship building process, to gain the contract at the available stage.





3. Expand to the internet

Creating a webpage to sell your services or products is a great way to expand; building an online presence will allow you to reach a wider range of potential customers. You’re probably wondering how you achieve this. Below are some steps to create an online presence;

  • Design and launch a website

It was found that 74 per cent of small businesses surveyed stated that their new website was effective at generating new business. Therefore a website is one of the biggest tools in creating an online presence, and there are many companies online that provide services in website production. Some offer easy templates and step-by-step design processes to build your site.

The domain name is your address on the internet, this allows you to customize your email and therefore every time you communicate your domain it reinforces your brand. What you also need to consider is including specific terms and words that will help potential customers or clients search for your business. You will also need to think about buying both the .com and the .com.au domains so that if your branding is a success someone else won’t have the opportunity to buy the domain and start a business off your branding.

  • Use social media

Using social media tools like Facebook and Twitter allows you to converse with your customers and reach out to further potential customers. Creating relationships and involving your customers, it is also beneficial resource for customer feedback.

4. National Expansion

Expanding nationally is usually the first step before expanding globally. Expanding nationally can be through expanding through the internet, reaching out to nationally based customers. This is usually the lesser risk option and it also it requires less funding. But it can also be done by opening a second location. What you first need to do it to work out whether your business can be duplicated, for example run without you. Once you have worked this out you can take further steps to find a new business location.
These steps and tips consist of;

  • Measure the strength of your existing business
  • Propose market research on any proposed possible locations, demographics, etc…
  • Make sure you have the available funds and cash flow
  • Make a strategic marketing and sale plan
  • Hire a business coach/consultant if needed.

5. Global expansion




If your business is product or service based the type of product/service will be the defining factor in the simplicity of expanding your business globally. This is because the overall process for expanding globally is exporting and for products like clothing and jewellery it is quite simple, but as you get into products like toys and electronics it may be a lot more difficult. This is because of the different standards and legislations in each country, the products have to be tested and analysed to make sure they meet all requirements. Before the process of product approval and testing can be undertaken you need to first understand the two methods of exporting (direct and indirect).

  • Direct

Direct exporting is a more hands on approach than indirect. This process also can demand a lot of time, but may also be the more profitable option in the long run. If you choose this option you will be responsible for finding buyers to purchase your product. You will also have to organise shipping. One method of making it easier is to hire a representative in the targeted foreign country who will be able to liaise with the buyers and sell your product as language and cultural barriers can be a possible issue.

  • Indirect

This method uses 3rd parties and intermediaries to handle the entire export arrangement, including; market research, promotion, setting up distribution channels and finding buyers for the product. This approach is generally the more appealing option for smaller businesses as it is more realistic, particularly if they are unfamiliar with the country. The companies that do indirect exporting also take care of the product testing and the product approval process that some products have to go through. This can be quite a complicated task on your own, especially if you don’t have experience, it is calming to know that it is being taken care of by a third party.

Global expansion can be a daunting strategic move for businesses but if the right research and planning is undertaken then you can confidently take the next step and expand your business.
There are so many ways to expand your business and improve your income and sales. Through research and testing the waters before jumping head long into each of any of these options, you should find the most profitable and best option for your business. Good Luck.