Growth by Geographic Expansion

The Art Of Geographic Expansion in Business

Geographic expansion is an attractive business strategy. If you are making money in one city, why not double your money by setting up your business in two cities? Why not expand to fifty cities? If only it were that easy...

Growth is the goal of every business owner. With a little luck and a lot of hard work, your business will grow and with it, your need to expand. Expansion can take many forms. One of the most common forms is geographic expansion, or the addition of one or more locations.

Before adding a second location, ask yourself why you want to expand in the first place. If your business has reached its full potential at your current location and your growth has leveled off, then adding another location might be a smart business move. However, if your desire to expand stems from simple boredom or your personal need for an ego boost, then you seriously need to reconsider your plans to make the leap to multiple locations - at least for now.

The only adequate motivation for geographic expansion is market multiplication. When done right, geographic expansion gives your business the potential to simultaneously sell your products in multiple markets. But, to be effective you'll need to research those markets in advance. You can do much of this on your own, but if you need help there are professionals who are willing to assist you for a price.

Generally speaking, a second location should be far enough away from your current location that it attracts new customers rather than just customers who normally shop where you are now. It should also be located in a community with a demonstrated need for your product. An area already saturated with similar businesses is probably not a good place for you to launch an additional location.

Choosing a location is may be the easiest part of geographic expansion. The real headaches start when you are faced with the task of operating a multiple-location operation. Until now, you have been able to single-handedly manage your business and directly supervise its daily operation. But you can't be two places at the same time. By adding multiple locations, you create the need to change the way you do business.

Delegation is the solution to this problem. The key is to find someone who is trustworthy and is capable of managing a location with minimal supervision. This person might be a current employee, or it might be someone you hire from outside your company. Either way, you will need to be comfortable with their ability and integrity.

The addition of a new location might also require a reorganization of your current staff. Should you hire a completely new staff to operate the new location? Probably not. Many small business owners find it better to send some of their current staff to the new location. This helps maintain uniformity between the two locations and adds a cohesive element to your business.

Finally, be aware of the fact that smart growth takes time. Opening too many locations too soon can have negative consequences for your business. It's much healthier to be patient and allow your business and staff the time they need to adapt to multiple locations.

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We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.

  • Debra posted on 7/15/2008
    While doing a white paper on increasing productivity I found the remarks in this article very enlightening. This helped to show me that it may be better to wait to expand you business and not just jump right in. Thank you, Debra

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