Updated: Dec 3, 2019
After launching your own business, you don’t want to grow stagnant – you’d like to grow. In order to do just that and capture more market share, the time has come to explore how to find new markets for your business.
It’s an exciting time because you’re on the brink of reaching new customers and possibly more regions, not to mention bolstering profits. That’s easier said than done. But, if done right, expansion into new markets could complement what you’ve already built and also take your business to the next level.
The right time to expand into new markets could actually be when you’re still gaining share in your current market. You want to strike while the iron is hot, so to speak, which is when your current market is still high in demand. If you wait too long, and your current market begins to fall out of favor, you could lose the tailwind of that momentum and expansion into new markets will be more of a challenge.
Another sign that you are ready to execute on what you know about how to enter a new market and expand is that your business is profitable. Forbes recommends that you’ve had at least three years of profitability, though you don’t necessarily need to be growing profits hand-over-fist. But knowing you can confidently rely on free cash flow in addition to whatever business funding you might need to obtain – whether it’s a term loan or small business loan – is a sign that the timing could be right for market expansion.
Now, if your expansion into new markets involves gaining a foothold new regions or even overseas, you get a bit more leeway. In this case, you might consider waiting until demand is drying up for your product or service in the domestic market but is on the rise elsewhere. You don’t have to take this approach, and if the stars align for you to pursue market expansion when the current one is still hot, there is nothing wrong with that. Keep in mind, however, that even in the best of market conditions an expansion – particularly overseas – can be capital intensive. Here is where you might want to consider accessing financing.
Now that you’ve decided the timing is right to pursue a market expansion, the next logical step is figuring out how to do it. You could pursue a slow and methodical expansion or you could make a more aggressive push, depending on what your “goals and objectives” are.
While there is no cookie-cutter approach to how to find new markets and consequently expand, here are a few steps you can use as a guide. Some of these will sound familiar from when you launched your business.
This could be a combination of both the demographics (age, gender, etc.) and location in which these potential customers are located. In the event that you are expanding your offering to your current customers, half of this work should be done for you already. As for the location, this could also involve expanding into new channels, such as mail-order or e-commerce if you haven’t already done so. You should still develop a profile of the customer you are trying to reach so that you know who are you are marketing to.
This will help you as you consider how to enter a new market by determining the demand for your product in a new region or among a new demographic. Market research also involves knowing the competition and their prices, so you can learn what customers are keen to pay for something. Additionally, market research should also involve trends surrounding your target market. For instance, Montclair, NJ has become a popular place for New Yorkers to settle down into suburban life because it gives them access to the city without all of the hustle and bustle that comes along with it. Observing trends such as this can help you spot opportunities for expansion into new markets.
Before you do, crunch the numbers and make sure that market expansion looks like a profitable decision. If you have to slash prices to the point that your expenses surpass your profits, is it really worth it in the end?
Also, give yourself a window of time in which you expect the market expansion to be profitable for you. In the interim, consider accessing financing to keep the lights on and marketing going strong while you are expanding and cash flow is tight for a while.
Remember it’s important to have a plan for how to find new markets and expand your business, but also stay nimble so that you can adjust to the market trends. What worked for you the first time around might not be the right recipe for your market expansion.
Talk to other business owners in the region or industry if possible to learn the buying habits of your potential customers (online, in a hurry, etc.). When pursuing an expansion into new markets, you might also consider partnering with another business that knows the lay of the land in the new market or even making an acquisition, in which case online lenders could assist with the process.
On the path to finding a new market for your business, you should explore your options. For instance, you might find that the best way to do this is to learn what the needs of your current customers are and then tailor your offering so that you can provide it to them.
If you tend to be risk-averse, this approach to market expansion could be the right path for you. It requires less of a leap since you are not taking on entirely different products right off the bat. Instead, your strategy is to sell more of what you have to current customers and possibly expanding into new but related product territory.
Whichever path you choose for expansion into new markets, just remember: you did it once when you were launching your business, you can do it again.