The past 18 months have been challenging for many business owners due to the global pandemic and related stay-at-home orders, financial issues, travel challenges, etc. However, it’s essential to continually look forward and seek out ways to grow a venture sustainably.
You might have had international expansion plans before COVID-19 hit that have been put on the back burner recently, but have you considered adding new locations or setting up new offices in other states across the country? This is more attainable in the current climate yet still offers excellent growth opportunities.
Such expansion is a huge undertaking and requires strategic planning and taking wise, considered moves. There are multiple factors to consider before you begin to make your move.
Consider If Your Current Business Model Is Scalable Enough
Scale is a crucial element to think about when you want to grow your business in a new area. You need to work out whether you and your team have the capacity to set up and manage another office or other location effectively and if you can deal with not only the extra sales that come with this but also the additional marketing, administration, HR, and general operational requirements.
Think about how you will manage two separate areas and what will happen when you’re not on-site in the new location or even the current one. Can your technological processes and tools handle the additional workload of interstate growth, too, and will you be able to source all your procurement needs easily and affordably enough interstate?
Scalability occurs when you can adequately generate more leads and service new customers without having to keep investing more and more resources to do so, eating up profits along the way. Before you start expanding into new areas, think about your return on investment for this type of growth and if it’s feasible as a result.
Determine the Best State to Expand Into
The next step is to determine which state will work best for your expansion plans. You need to pick a place with plenty of potential customer demand for your products or services. It’s not a given that the interest will be comparable in different parts of the country, and some states might have the interest but be too small a market to be worth your while.
It pays to complete some testing before you go too far down the expansion process. You might travel to the new area and attend some top tradeshows, conferences, or other events to get a feel for demand or create a pop-up shop for a period to see how sales go. You could sell at some markets or meet with some potential key clients, too. Or, consider running an advertising campaign for a couple of months in the new state to see what the response is like.
Another element of picking the right expansion area is checking out the competition. There’s usually no point trying to move into an already saturated market with many other players in the niche you service, unless you know you can offer consumers there something radically fresh and interesting. Furthermore, run some numbers and get an idea if the current market is growing or contracting so you can tell what kinds of opportunities might present themselves.
It’s wise, too, to research the rough costs of leasing or buying premises and related expenses. Also, learn about the different legalities you might have to deal with in the state(s) you’re considering. If they’re quite different from those in your current area, you could not only have trouble setting up shop in the first place but have such high expenses to contend with that it makes a move untenable.
Look into regulations around hiring and paying employees, workplace health and safety, opening hours, and property lease and sale laws. Also, consider duties and taxes, trading licenses, marketing permits, and the like.
Work Out the Best Expansion Model
Before you start planning to sell your wares in another state, work out the best model for this growth. For example, you may choose to set up a franchise system, use licensed contractors interstate, or retain control by creating additional company-owned outlets. There’s no set right or wrong here since it comes down to your business type, industry, goals, finances, and other factors.
No matter which path you go down, it helps to get assistance from experts such as lawyers, financial advisors and planners, accountants, small business and industry groups, business coaches and mentors, and government departments.
Expanding your venture across state lines can be an excellent way to rapidly grow your operation and reach your personal and business goals. However, do it carefully. Covering all the above bases will help.