When entrepreneurs succeed, the initial reaction is to grow. Potential profits tempt entrepreneurs into thinking that they need to expand their business. Before making the decision to expand your company into new markets, however, think back to the original objective you envisioned for your business. Was the original intention to create a small business that could be run by one or two individuals, would remain manageable, and would create just enough revenue to sustain your family? Or was the objective to create a business that would grow at every opportunity, take over new markets, and become a nationwide (or worldwide!) business phenomenon? If you chose the former, this section may not be for you; but if you are an entrepreneur whose dream is to become the owner of a multi-billion dollar corporation with regional offices in twenty-five countries, then read on!

The decision to expand your business into new markets is exciting, full of potential challenges and potential rewards. Many entrepreneurs, when making the decision to expand their businesses, do not know how to begin the process. With so many options out there, how do you know what path is right for your business? This section will navigate the tricky waters of business growth and market expansion, will help you decide whether to expand online or internationally, will teach you how to expand without ever leaving your current market, and will help you succeed in growing your business!

The two types of business growth

When most entrepreneurs think about expanding into new markets, they think about doing so geographically. They think about entering new regions, new states, and even new countries. There are advantages and disadvantages to this type of expansion, and it is up to you to determine if it is the right path for your business. The primary advantage to geographic expansion is that you already know your customers. Although slight differences exist from region to region, your methods of reaching your target group in Florida won’t differ significantly from how you might reach your target group in . That is to say, many products and services are directly applicable across geographic lines. Think about what your company offers. Is it something that different persons in different regions can all benefit from equally? For example, if your company makes a new soft drink that you have tested regionally, chances are other regions will be similar in their soft drink preferences. If, on the other hand, your company makes an item such as beach towels, you might have better luck selling in coastal markets and have trouble selling in states such as Kansas . Think about why people use your product or services, and whether the needs you are meeting are universal needs or might be influenced by location.

If you decide your product is not universally applicable, and you might have difficulty selling it nationwide or in new regions, you can consider the second type of business expansion: target market expansion. Companies whose products target adults, for example, might assume they have to expand geographically to reach adults across America. What they might have overlooked, however, is that by altering their product slightly, they could target children in the geographic market they are already serving. If your company makes gourmet soups that cater to adults, and you want to expand your reach within the region you work, think about what changes you could make in order to attract other groups. Add fun shapes or alphabet noodles to target your soups to children; putting your soups in disposable travel containers might market your product to busy adults on the go. The possibilities are endless, so be creative! There are clear advantages to this method of expansion as well. While it might limit your growth more than geographic expansion, it may be a more affordable option.

Think about what it would take for your company to expand geographically. How would you set up a presence in new regions? What would this cost in terms of time, marketing dollars, staff requirements, and resources? Setting up a storefront for your product or services in a new state would not only require significant capital and resources, but it would require you to hire someone to manage the store, giving you less control over the quality of service within that region. Next think about what it would take for your company to expand to a new target market within your current geographic location. What would it cost to alter your product? Would it require a label change, extra ingredient, or perhaps it would be a more significant change.

Once you have determined the expansion method that would be most suitable to your company and your company’s goals, there are a few things to remember to make your expansion a success:

Grow slowly and spread out your growth! You have decided you want to expand geographically, and you plan to target ten states. Don’t enter all ten states at once; ease into the markets one at a time. This will allow you better control over demand, will decrease your losses if a particular market does not work out, and will generate a revenue stream that will help fund each successive launch into another market.

Do your market research! Just as you did when you started your business, each new market you target—whether geographically or demographically—must be thoroughly researched. Examine the demographics and needs of your new target market. Look at your new competitors, and determine what challenges you face entering the market. Click here to learn how to conduct thorough market research.

Remember that every market is different! Just because transition into one new market did not work, don’t assume that you can’t expand at all. Just because kiwi-mango-banana bars did not take off in Wisconsin , for example, does not mean that people in California won’t be clamoring for them. Learn from your mistakes, do extra research, and test your product prior to launch. Hand out samples and ask for feedback before launching full-scale into the market.

Putting your business online

You have decided you want to expand geographically, and the market is there for you to do so. Nevertheless, you don’t have the resources (time, money, or staff) to build up a physical presence in each new location. Your options are to sell your products to distributors in each region, create a mail-order system, or go online. The Internet is an extremely powerful tool and is becoming a large part of commerce and sales. More and more people are turning to their PCs to buy clothing, books, electronics, and even their groceries. The biggest attraction to online shopping is convenience. Why run around to a dozen different stores when you can view each store, all of their products, and what is in stock, and buy what you want from the comfort of your own home?

For small businesses, a presence on the Internet can be an efficient and cost-effective way to expand your customer base and increase sales. There is a cost to doing business online, however, and it may not be right for everyone. Although eBay has proven that people will buy anything online, some businesses profit more from online sales than others. For example, if you make personalized jewelry and cigar boxes, people from all over would have a similar interest in ordering them as gifts. Allowing them to ship directly to the recipient of the gift is an even greater bonus! A small restaurant, on the other hand, whose clientele are primarily local, would not benefit much from an online presence, because the target market has not expanded beyond the same local group.

Establishing a presence on the Internet increases awareness of your business, will generate online sales, and can help you compete in markets where you don’t have a physical presence. Conducting sales directly online is not cheap, however, and you may face steep processing charges from credit card companies or a high fee from an outside processing company who would handle your transactions for you. Creating a website can also be an expense, and works best when kept up-to-date with current information. Before you decide whether an online presence is right for your company, make sure you weigh all of the potential benefits against the resources necessary to implement the change. Consider the new markets you will reach through the Internet, whether they would have a need or interest in buying your product, and whether you could justify the cost of a website based on the potential increase in sales.

If you make the decision to put your business online, do your Internet homework. Learn how to maximize exposure through search engines and proper use of keywords and find out how you can create a URL that will drive traffic to your site. Although there are many free or inexpensive sources available online to help entrepreneurs start their own websites, it may be worth the cost of talking to a technical consultant who has experience in the field. He or she can help you develop a more professional and functional website, which can ultimately increase your online sales.

Going international

Exporting your products to other countries can help your business grow up to 20 percent faster than businesses focusing solely on domestic markets, and can make your business much more profitable, according to the US Department of Commerce. If your company has been successful in the United States , there is a good chance you can be successful in international markets whose needs and preferences are similar. Things to consider before taking your products to other countries are the availability of similar products already, the ability to duplicate or manufacture your product in other countries, the unique features of your product, and the universality of your product. Also consider what changes will have to be made to your product prior to distributing it abroad.

If you decide exporting your products might be the right business decision for you, you will need to develop an export strategy. Developing an export strategy is very similar to developing a strategic plan for your company. Click here to review how to develop a strategic plan. First consider the overall objectives for your company as it moves to other countries. Determine the strategies for reaching those objectives, the goals for evaluating progress, and the plans for implementation. How your export strategy will be implemented is a major factor in whether or not exportation is the right decision for your business. Look at the time, staff, money, and other resources required to sell your products in other countries. Do the benefits outweigh the costs, or would your valuable resources be better spent generating new domestic business?

As you develop your export plan, make sure all of the following questions are answered:

What changes must be made to your existing product to make it ready for export?

What countries will be targeted, and how do the customers there differ from the current domestic customer base?

How will those customers be reached?

Who will be involved in implementing the export plan, and what will be the timeline for implementation?

What will be the costs to implement this plan?

How will your progress be evaluated?

An important reminder: Just like your strategic plan, your export plan is a dynamic document that will change based upon your progress, successes, setbacks, and lessons learned. A great online resource for entrepreneurs serious about exporting their products is www.Export.gov, which can help you take the steps necessary and get the licenses you need to export your products in accordance with international export regulations.

For additional help in marketing your business, check out TVC’s Veteran Virtual Business Incubator, a one-stop resource for Veteran entrepreneurs!