Expanding into new markets can be a great way to grow your startup, but it’s not something you should jump into immediately. There is a lot that goes into pulling off a successful entry into a new market. It must be timed right and thoroughly researched and planned out. Here, we will be discussing how to determine if the time is right to start expanding your startup into new markets and tips to help you prepare.
How to tell if it’s time to expand into a new market
Expanding into new markets is exciting. It means that your business is growing and you’re ready to take things to the next level. It’s a big step that can increase your reach, profits, and more. However, it’s not a step that should be taken lightly. Expansion requires resources, and it’s important to make sure that your business is ready to handle the extra weight before you make a move. But how can you tell if your business is ready? Here are a few key indicators that your business could be well-positioned to begin expansion:
- You’re hitting your goals – you are consistently meeting and even surpassing the key performance indicators you’ve set for your business.
- Your headcount is high enough – your key positions are filled and the team has enough bandwidth to meet the demands of entering into a new market.
- You have the necessary capital available – you’re managing your cash flow well enough that you can afford to take this potentially expensive leap.
Preparing for an expansion
Know your aim
To start, what kind of expansion are you after? Is it additional products/services, new locations, new demographics, or something else? How you prepare will obviously be determined by the type of expansion you’re after. Once you’ve defined this new market, you can begin conducting your market research.
Do your market research
If you’re looking to expand, you’ve hopefully already found your product/market fit in one market. This process will be much the same. Your market research should identify your target customer, their needs, and how your unique value proposition meets that need. Lastly, you need to know if the target market is willing to pay for your solution, and if so, how much.
Assess your current capabilities and needs
Now it’s time to look internally at your business’ current capabilities to see what you lack. Expansion can put a lot of strain on a business if processes, people, and resources aren’t in alignment. Consider:
- Business processes – how much automation is in place, and are there areas that could be automated to increase efficiency?
- The team – what additional roles will need to be filled to ensure coverage across all markets?
- Resources – what resources are currently strained or lacking? With an additional market, these gaps will only become more apparent.
Create an action plan
A good rule of thumb is to start with your revenue goal as a key performance indicator and work backward from there to set a game plan:
- Pricing – what does your model look like, and how many customers will you need in this new market to reach your revenue goal?
- Lead generation – does your current lead generation model work with this new market?
- Marketing – a new market often means different marketing strategies. What will these look like?
- Sales & delivery execution – will these stay the same or will they change? Do you have the logistics in place to make sure these support your revenue target?
- Measurement – how do you plan to measure the success of all of these critical efforts?
Entering a new market is incredibly exciting for a startup or any business for that matter. With the proper preparation and attention to detail, this new journey can be both highly rewarding and instructive for future endeavors.