Expand your business into new markets
You’ve increased your sales, extended your product line, and established your product or service in your home market. Expanding into new markets might be the natural next step for your business. But it takes a lot of energy and research to get it right, so take your time – you want to set your business up for success in the new market.
Here’s what you need to do before expanding your business.
Define the market you want to sell to
You’ll need to understand how the market works, so consider creating buyer personas for customers in the new market. Then, make sure you have a good grasp of market growth rates, roadblocks to entry, competitors, and demand.
Market research can help you with all this. It might be worth investing in a professional instead of doing it in-house. They have the necessary experience to analyse and assess your business’s potential to expand into new markets. They’ll know what to look for, what questions to ask, and who to ask.
Choose your mode of entry
Here are a few ways to enter a new market:
This can be an entirely new product or service for the market or a new shop for the location. It’s a high-risk mode of entry and you’ll need more money and resources, but you’ll be in control.
You can franchise or acquire an existing business in the market. It’s a quicker mode of entry and you’ll immediately get a feel for how the market works, but it can be costly.
You can work with a distributor or agent in your target market or team up with another business in the location. This poses less risk and can be a good way to get to know the market better, but you’ll have less control. Take time to build a relationship with your partner and earn their trust. Let them know what’s in it for them and how your product or service is unique enough to stand out in the market. And document your agreement so there’s no misunderstanding.
Work out if you have enough resources
This includes capital, inventory, staff, technology, and more. If you don’t have the resources you need, what can you do? You might need to hire more people or outsource tasks, raise more funds, create new processes, or increase production to support your expansion.
Think about the overall impact expanding will have on your business. Are you ready to do it comfortably? Will expanding into a new market help or hinder your business? Will it cause your business significant financial strife? Make sure to answer these questions honestly before diving in.
Develop a solid market entry plan
Once you’ve decided you’re ready to break into your market of choice, it’s time to create a solid market entry plan. Breaking into a new market is like starting a business, so your market entry plan will be similar to a business plan.
Make sure your plan is targeted to the market you’re moving into. Include how you’ll measure success, how you’ll price your product or service in the new market, your financial strategy, and your sales and marketing activities. To get into the flow and start planning, check out the chapter on how to write a business plan in our guide to starting a business.
Educate your team
You’ll need to introduce your team to the ins and outs of your target market. Schedule training sessions to get your current staff up to speed, or consider forming a new team from the employees you’ve got or from new recruits. Work with them to develop new processes for your market.
If you’re expanding to a different location, your team will need to understand how to communicate with customers there and respect their particular customs or practices. Consider hiring local employees or working with local partners to make it easier to educate your team.
Chapter 11: Where to next? Tools and guides by Xero
Find more guides to help you grow your business, along with handy tools to make it easier. Xero has everything you need to take your business further.Read chapter 11