Expanding your business is an exciting phase that opens up new opportunities and reflects the success you’ve achieved. However, this growth also brings challenges that, if not managed properly, can jeopardize not only this prosperous stage but the stability of your entire business.
In this blog, we highlight the most common mistakes businesses make when expanding and how you can avoid them to ensure sustainable and successful growth.
The most common (and severe) mistake when embarking on an expansion is not having a clear and defined plan. The absence of a detailed strategy can lead to confusion, hasty decisions, and poor resource allocation, making it crucial to establish specific objectives, analyze the target market, identify potential risks, and develop a concrete action plan that covers financial, operational, and logistical aspects.
How to avoid it?
Meet with your team to set specific goals, identify potential risks, and develop a detailed action plan. Use tools like a Gantt chart to assign responsibilities and deadlines, ensuring all financial, operational, and logistical aspects are covered.
Expanding into new markets and incorporating new products can easily lead to overlooked costs such as salaries, work tools, supplier payments, and training. If this expansion is backed by external financing, solid financial management is crucial to avoid liquidity problems.
How to avoid it?
Move away from manual methods like spreadsheets and integrate financial and accounting systems within an ERP. This will consolidate your growth, optimize financial management, and help you maintain rigorous control over new income streams.
Entering a new market without a deep understanding of it is a recipe for disaster. Before expanding, it’s essential to conduct thorough research that includes market trends, competition, consumer preferences, local regulations, and cultural barriers.
How to avoid it?
Create a "battle card" or manual with this information, allowing you to adapt your offerings, marketing strategies, and operations to the specific characteristics of the new environment. Your sales and marketing teams should collaborate on this research to make smarter investments with a higher probability of success.
While we’ve already mentioned management and project tools, technology in other areas plays a fundamental role in business expansion. It’s important to have the right tools to manage operations in the new market, communicate with employees and customers, analyze information, and increase productivity or service delivery.
How to avoid it?
Plan the inclusion of fixed and intangible technological assets from the start and budget for their implementation. Plan their rollout in stages to optimize ROI and reduce the financial burden.
In addition to technology, it’s a common saying that "a company’s most valuable resource is its people." A successful expansion isn’t possible without a well-prepared team. Your employees need to be equipped and aligned with the company’s new goals to take on the additional responsibilities that will come.
How to avoid it?
Invest in training, have a well-defined career plan, and promote the growth of current team members to ensure your team is aligned with the new goals and objectives.
Lacking a solid presence in the channels where your new market is located can sabotage your entire expansion. It’s crucial to allocate part of your budget to a marketing strategy that not only attracts new customers but also reinforces your brand in this new environment.
How to avoid it?
Create a strategy focused on the pain points of your new target audience while highlighting your accumulated experience and success. Also, direct some of your efforts towards generating demand and qualified leads to boost your presence in the new market.
As a company grows and expands, it’s crucial to maintain the essence of its mission and vision that led to success. The risk of losing these values amid new habits or approaches can lead to communication challenges, team demotivation, and a loss of corporate identity.
How to avoid it?
Work closely with the HR team to continuously integrate and promote corporate culture among new hires. Simultaneously, training should be ongoing and add value to team members, preparing them to take on more important roles in the future.
It’s common to focus on acquiring new customers during expansion and neglect the ones who brought you to where you are. This is a mistake that can have severe consequences.
How to avoid it?
Your current customers are your best ambassadors, so it’s crucial to maintain a high level of attention during expansion. New prospects are likely to seek references from them regarding the quality of your current service before deciding to work with your company. Therefore, optimizing communication channels with a CRM will help you earn the trust of new prospects.
Have you executed your expansion plan? Now, how do you evaluate the results? To determine whether to continue, make adjustments, or stop altogether, it’s essential to monitor and have accurate reports on the new data generated. Not doing so increases the risk of failure.
How to avoid it?
Use business software that integrates Business Intelligence or Artificial Intelligence modules to provide clear and up-to-date reports on the expansion’s performance. Also, knowing which KPIs to monitor to assess whether the plan is working is another critical element. (We have a KPI guide that can help you with this point, and you can download it here).
Finally, you might want to grow your business quickly. However, without proper preparation, a hasty expansion can result in the loss of stability and valuable resources.
How to avoid it?
Before moving forward, take the time to carefully analyze your finances, project cash flows, and evaluate the current market dynamics you’re operating in.
A clear example can be found in startups, which, despite having considerable initial investments, sometimes opt for organic or moderate growth strategies. This way, they reduce risks and maintain stable and balanced profitability.
With over 15 years of experience across various companies, including some fast-growing ones like Konfio or Clip, Tekiio, as an Oracle NetSuite Partner, positions itself as a reliable ally for integrating technology to serve businesses.
We invite you to contact one of our business growth experts to discover how we can help you with your expansion plan and ensure it’s a resounding success.