3 Key Business Expansion Strategies Used by Business Owners and Leaders

June 6 2023 - In the early stages of business development, the key strategy is to ensure the survival of the organization. The first few years of trading are incredibly important, as failure is an ever-present risk. It is estimated that 20% of all small businesses fail in their first year and this statistic continues to rise over the first decade of trading. It is only when a business has significant levels of revenue and a growing demand for its product or service that the business owner or leader can look to ways to expand. Expansion is a key way to safeguard the long-term success of any organization, but the key is knowing when and how to undertake this. There are multiple routes to business expansion, and these can even include selling off smaller firms in a large corporation to release funds for new business enterprises in more profitable markets. In this article, three key ways to expand an organization will be discussed by drawing on a range of different business strategies.

Franchise opportunities

Using franchise opportunities can be an intelligent way to cultivate the rapid expansion in an organization. It is commonly used when businesses want to enter new locations for trade and has been proven to be an exceptionally successful strategy in the fast food industry. Companies such as McDonald's use this strategy to foster expansion into new marketplaces. It is estimated that 93% of all worldwide McDonald's restaurants are franchises. The organization may buy up suitable property, which is then leased out to the business person who runs the franchise. By using this model of business expansion, operating costs are kept extremely low (as the franchisee will be responsible for these) and there will be a predictable level of income from each new establishment.

Selling component firms to release capital

As a business matures and its growth has been sustained over a period of years, there is the option to sell off component firms from the larger business portfolio. This can be the ideal way to release significant sums of equity and capital that can then be used to fuel newer enterprises and enter new markets. It is of paramount importance to understand when the best time is to sell component firms. Ideally, they should be performing well to ensure that their market value and share price remain high, and a substantial return is generated from their sale. Companies who seek to sell off some of their other firms in their wider business portfolio commonly choose to use intermediaries who have experience in selling companies and finding suitable buyers. For example, organizations such as Poe Group Advisors have a wealth of experience in organizing the purchase and sale of accountancy firms and use this knowledge to ensure that buyers are a perfect fit for the company.

Finding new markets online

With the explosive growth of the internet in the last two decades has come a rapid increase in eCommerce. Billions of people now shop online from computers, tablets, or smartphones and this is one of the fastest-growing forms of business. Every organization that operates for profit should cultivate an online presence to allow them to access global markets for their products and services. It can be the key way to generate substantial revenue streams and reach markets that were previously underdeveloped by the business. Put simply, online trading is one of the most achievable ways to foster expansion and every company in 2023 that seeks growth should have their own dedicated and promoted website.

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