Developing the right business growth strategy for your retail or restaurant brand can be a challenge, particularly during the earlier stages of growth. The ever-shifting demands of running a business can leave little time for strategic planning, and even the best of plans sometimes yield disappointing results.
Given the complexities of determining how to expand a business, sometimes even the most seasoned executives and entrepreneurs need to take a step back and remember key business truths.
The next time you feel uncertain about the right path forward for your business, consider these four best practices.
1. Remember that there is no one-size-fits all business expansion strategy.
If you are looking for a generic, fail-proof formula for success, you will be disappointed. Each business situation is unique, which is why each expansion plan should also be unique.
Be specific. Tailor your plan to your brand’s strengths, the nuances of your subindustry, and your competitive threats. There’s nothing wrong with imitating best practices from others but adapt those best practices to fit your unique situation.
2. Be deliberate in your expansion plan.
Odds are that you won’t immediately discover the strategy that produces the best possible results. Some trial and error should be expected but be methodical about how you approach it.
Rather than haphazardly trying new growth avenues, consider what you are trying to achieve and identify the possible paths for getting there. Select the path that seems to offer the best possibilities, test it, and measure the results. If it doesn’t live up to your expectations, try the next best approach.
3. Identify your target customers.
As the author of this Entrepreneur article reminds us, “You got into business to solve a problem for a certain audience. Who is that audience? Is that audience your ideal customer? If not, who are you serving?”
If you lose sight of who your customers are, you risk selecting business expansion strategies that fail to resonate with them. Consider developing a customer profile, which combines your customer records with external data sources to identify the demographic and lifestyle characteristics that make your customer unique. If the results surprise you, consider what changes you need to make to reach your ideal customer…or whether to pursue new growth opportunities with the customers you are already attracting.
4. Evaluate market penetration vs. market expansion opportunities.
Market penetration and market expansion are two common market growth strategies, but there are pros and cons to each.
A market penetration strategy focuses on growing market share in existing markets. You can use local store marketing to boost foot traffic at existing units or look for infill opportunities to add units that reach previously untapped pockets of potential customers. At some point, however, a market becomes saturated and you have to look beyond it.
A market expansion strategy takes your retail or restaurant brand into new markets. You gain the opportunity to reach a whole new set of customers but have to overcome the challenges of raising brand awareness and establishing your local supply chain.
Consider both business expansion techniques. Which one offers the best opportunities for your business in its current stage of the growth cycle? No matter which approach you choose, make sure you gather the appropriate market research and tools to guide the execution of your decision.
The Bottom Line
Small and medium sized businesses are in exciting stages of the growth cycle. By taking the time to craft a business expansion strategy tailored to your unique environment and customer base, you will position your retail or restaurant brand for long-term success.
Buxton works with brands in all stages of growth. Read our thoughts on the three primary growth stages and how to navigate them using analytics for more insights on how to expand businesses.