With current economic challenges it’s more important than ever before to know how to expand your business if you’re looking to grow – whether that be aiming to increase your market share or expand your product line. BCU Advantage spoke to David McGee, Teaching Fellow at Birmingham City University Business School on the different opportunities regional businesses have available to them.
Understand what it means to expand
Firstly, by expansion you have to define what this means to you. In most business cases this is growth through revenue and profitability. The Ansoff Matrix invented by business management expert H.Igor Ansoff is a great place to start in helping a business to determine the direction of its product and market growth.
Ansoff breaks down four ways a company can grow – you can look to gain greater share of your existing market, look at expanding into new markets, develop new products or diversify.
Before embarking on delivering your business expansion strategy, it’s important for businesses to understand each different approach and which one suits their business at the particular stage of its development.
1. Gaining a greater share of your current market
Gaining a greater share of your existing market sounds challenging but it can be done. Lidl and Aldi recently announced their increasing share of the grocery market, with Lidl improving on their profits by 300%.
If you’re a firm in the West Midlands looking to expand your share of the marketplace in the region or beyond, one way you can do this through the requisition of new or existing firms within your industry.
I worked with a firm in the West Midlands that focuses their strategy on expanding through the takeover of struggling rivals. By taking their customer base, data, itinerary and inventory this provides a launchpad for the business to improve upon and develop that base – applying new or existing methods of their own to that company, with the expectation that it will help your business to grow as a result.
2. Expanding into new markets
Another way you can expand your business is by launching into new markets. The UK government is very keen for businesses to expand internationally and there is a lot of support from the UKTI to help with this.
A local technology firm I work with had wanted to expand beyond the UK market into China and the USA, due to the margins for growth for their products in the UK being very small. In order to do this, they were able to access financial support from the government to access a global trade event – the Mobile World Congress in Barcelona, to help them establish trading relationships with partners in other countries.
3. Expand your product line to your current customers
If you’ve currently got an eager and engaged customer base, selling new products and services to them can be a great way to increase your revenue.
I have worked with a company whose main product was antennas. In order to increase their service offering they focused on different implementations for their antennas in a variety of products and services. This can be a great way of expanding your offering while still utilising your existing knowledge base.
Finally, you can consider diversification – selling new products to new customers. The pandemic forced a lot of companies to diversify. When certain markets were closed to them companies in the UK had to look at ways they could utilise their materials and knowledge to sell new products to new customers.
Whatever approach you to take on how to expand your business using a structure such as the Ansoff matrix will give you a clear indication of what suits your business at the time and the level of risk that will entail. When your business is feeling like there is no direction, these four steps can help you really investigate potential opportunities for growth through expansion.
David McGee is just one of our experienced course leads on the Help To Grow Management Course – a 12-week programme aimed at helping Senior Managers of Small and Medium sized businesses to boost their performance, resilience and long-term growth. Find out more how this 90% funded programme can help your business.