The key is to manage growth in a controlled way. Growing too fast can be worse for a business than not growing at all.
Things to consider before expanding:
Look at the economies of scale. You should only grow your business if you can sell your products or services at lower prices or m ake more profit per item.
Are your competitors expanding? If they are, they may have identified new market opportunities or developed a new idea.
Do you have the necessary finance without having to find it externally?
How will your customers respond to change?
Examine the business environment and assess if it will support your expansion.
Review your role as an expansion will change your responsibilities.
Get back to basics. Make sure that you don’t change what made you successful in the first place.
There are a number of ways to expand your business:
Target a new market or introduce a new product
A business can expand from its current operations by introducing new products to existing clients or targeting new markets. New markets could include new customer segments or new geographic territories.
Buying an added-value business
An added-value business complements your existing business and builds on its success. Either business can stand alone but gain an advantage by working together.
Tenders offer small businesses the opportunity to expand and grow. Tenders are put out by government, large public companies, parastatals and municipalities and are a way of inviting business to provide goods and services on a contractual basis. If a business submits a tender document it becomes an offer. If that offer is accepted it becomes a contract.
When you win a tender, you enter into a legal and binding contract to complete the work set out in the tender. So before applying for a tender, you need to be sure that you can deliver the tasks required. Otherwise you risk ruining your business’s reputation and even worse, incurring financial consequences as a result.
Franchise your idea
Franchising is a method of distributing a product or service and a way of doing business based on a proven format. Money is paid, usually upfront and ongoing, allowing the use of intellectual property and for continuous provision of support and training. The advantage of expanding this route is that outlets are run by owners who are driven by the success of their business. However, franchises require close, constant cooperation and hard work.
Exporting can extend your market and boost your turnover. You need to consider a few important aspects: pricing for the export market, distributing and promotion of your products internationally, and competitors in that market. Look for local websites which offer information and advice on how to register as an exporter, export incentives and opportunities.
Many SMEs in Zambia are able to rapidly grow their businesses by importing stock from international suppliers rather than buying domestically.
By finding good supplier abroad you may avoid the middleman and hence bring down your costs and substantially increase your profits.
Some businesses also find that importing raw materials rather than finished goods and adding value locally allow them to bring down costs and increase profits.
Whether importing raw materials or finished goods it must be considered carefully as import logistics and international payments can introduce increased complexity to the business.
If you need help on financing your expansion, look no further than Standard Bank.
We are here to support your business and any expansion plans you might have for it. For more information, visit your nearest Stanbic Bank branch or call +260 211 370130 or 370053 or our Call Centre on 8200.