Strategies for Expanding Your Business

You received counsel from a business lawyer when you started your business, to draft the agreements, obtain the necessary licenses, and choose the right organizational structure.

Now you are ready to expand your business to serve more customers and increase your profits. You are now an experienced businessman so you should be able to do it yourself by just working harder. You won’t need your lawyer this time, right? Hold on. Not so fast. There are four different ways to expand your business, and each one has its own challenges and legal risks. They focus on increasing existing market share, entering new markets, developing new products, or expanding into entirely new business areas.

Deciding which type of expansion is right for you is critical. The best strategy is the one that aligns with your company’s current position, long-term vision, resources, goals, financial standing, and appetite for risk.

Here are the four key directions for business expansion:

Market Penetration

This option involves increasing sales of your current products or services in your existing market. This involves:

• Sharpening your marketing by targeting the demographics who are most likely to choose your products
• Enhancing customer service through customer feedback
• Adjusting pricing to boost market share
• Studying your customers’ loyalty and purchasing behavior

Market Development

This option involves entering new markets with your existing products or services. This involves:

• Opening a new location
• Targeting new demographics
• Evaluating your competitors’ strengths and weaknesses

Product Development

This option involves developing new products or services to reach new or existing markets. It involves:

• New products or services to sell to your existing customer base
• Creating add-ons
• Innovating to solve different customer needs

Diversification

This option involves offering new products or services in a new market that complement your existing offerings. It involves:

• Entering a new market with a new product, which is the highest-risk strategy but offers the highest potential reward
• Entering new industries or business lines unrelated to your current products

Supporting Expansion With Help From Others

• Partner with other businesses to expand your reach or product range
• Purchase or merge with another business to rapidly expand market share or capabilities
• License your business model to others to expand to new locations without high capital investment
• Expand by taking control of your supply chain (moving backward) or distribution (moving forward)

You Don’t Have to Do It Alone

Expanding your business can be a lot like when you started the business. Even the best-laid plans can sometimes fail. Before making any business decision, you should consult a business lawyer who can advise you, based on your individual situation. He will identify financial, operational, and regulatory risks early to find ways to mitigate them and protect your business as it expands. The business lawyers at Corporate Securities Legal LLP have successfully helped clients expand their business for many years.