As an entrepreneur, you probably naturally dream about growing your business—whether regionally, nationally or internationally—but expanding isn’t an easy move to make, and entrepreneurs often face many challenges along the way, especially if they’re not properly prepared or ready to grow.
We chatted with AJ Khan, CEO of the International Institute of Certified Innovators & Entrepreneurs (IICIE), a global organization for innovation and global start-up entrepreneurship. IICIE offers programs to help unique and innovative startups expand internationally, and to enhance the small business and corporate innovation ecosystem. AJ offered some insight for small businesses wanting to expand, from what they should consider before deciding to grow your business. .
AJ explained that entrepreneurs need to ask themselves why they want to expand before they decide to make the move, and they also need to be ready for expansion. By expanding your business you’ll potentially increase sales and gain global brand recognition, which can be incredibly beneficial for your business, but only if you’re prepared to keep up with this growth.
But how do you know you’re ready to expand your business? AJ Khan recommends asking yourself these five questions to find out:
1) Are you successful in your home market?
It’s not just a simple yes or no. Answering yes doesn’t mean success in a new market will be guaranteed, and answering no could actually mean your business will benefit from reaching new customers. This question is more about understanding why you are (or aren’t) successful in your home market, and whether expanding outside your market would or would not increase your sales.
2) Is the majority or a big part of your profit coming from outside your local market?
When you analyze how sales are going in your home market, you might find that your business is thriving but that the bulk of your customer base is actually located somewhere else. This would make a good case for expansion right away, as it’s really about increasing your current customers’ access to your product or service, and reaching new customers with similar buying needs through proximity.
3) Do you see organic growth (leads, sales, etc.) from outside your local market?
You might notice that sales are thriving in your local market, but, increasingly, you’re seeing growth coming from outside that market. This is a good indicator that expanding to that new market could be a lucrative move for your business. You would benefit from exploring it further through market research.
4) Do your highest value customers come from outside your current local market?
Similarly, you might be doing well at home, but customers coming from outside your local market have an even greater need for your product or service. Maybe they’re in a location where your product or service more of a novelty, with fewer competitors offering similar options. If you see this kind of trend, it’s worth diving deeper to try to understand what’s motivating these customers.
5) Are you getting demo requests and/or referrals from outside your current market?
If you’re noticing that you’re starting to get interest from a new market, this could indicate a potentially valuable space in which to expand. You should explore new markets where you’re getting referrals and get an idea of the potential that might lie in this new opportunity.
If you answered yes to the above questions, expanding your business into new markets could be a great next step. But there are many other things to consider before moving forward. Interest from customers in a new market is a good start, but you’ll need to research a host of other things—potential competitors, culture, government regulations and logistical practicalities to name a few—before you can truly know whether to start up business in a new market.
Stay tuned for the next segment of this series, where AJ Khan will share his advice on how to overcome the biggest challenges to expansion and position your business for success.
Written By: Lauren Marinigh, Social Media & Content Creation Coordinator, Futurpreneur Canada