Find out if you are ready to learn and which path to follow.
You may be thinking about franchising your current business, expanding it, or growing it. You may need to set new goals if you have reached a certain point. You have many options when it comes to deciding what direction you want to go.
Horizontal or vertical growth is only one option. A lot depends on your timing, future goals and how much time you can devote to your existing business and new ventures. Our guide will help you determine the best direction for your retail business.
How to tell if it’s time for your retail business to grow
In business, timing is everything. You could crash and burn if you grow too fast. If you take too long to grow, an opportunity may pass you by. There are many indicators that will tell you it’s time for expansion, growth or diversification.
Customers demand it
Your customers may be asking you to open a store 200 miles north to save them the hassle of driving all the way to your location. This is a sign that your business has a loyal customer base as well as a high demand for your products. This could mean opening a store, opening a franchise or opening an online shop visit site.
You are out of the red
You don’t have to wait if your business has been successful for several years. If you don’t move, it will be hard to increase your customer base. You’re most likely seeing more demand than there is supply, unless you’re having a time management problem. A steady profit is a sign you are able to expand and will likely do well in other market.
The business world is stagnant
This is a good goal, but it’s unlikely that you will reach this point in your business. Even if you have a hugely popular product like salted caramel-chocolated marshmallows, it is important to create new products for customers who want to try new things – and those who don’t like marshmallows. It could indicate that you need to move forward or backward if you feel stuck.
Horizontal vs. vertical
Once your business has been a success, it’s time to expand and reach new people. Vertical growth is a way to do this. It allows you to control your production and supply.
If you are a specialist in gourmet chocolates, and your store is doing well but you depend on the largest supplier of peanuts from Virginia, you might consider buying that factory. You would be able to control the peanuts as well as the supply and demand.
Consider what you can do with this peanut supplier. You can now make money by selling peanuts to others and expand your business. You can make amazing chocolate confections with the peanuts you have grown, or bag them up to sell to customers as roasted salted peanuts. You can also pass on savings by lowering your costs.
Horizontal growth is a different approach and can make a company more dominant in a market. Horizontal growth is about expanding your business’s reach and aiming outward rather than up. This generally means that you will want to acquire businesses and products from like-minded people.
If you have a well-known dress shop that sells vintage clothing, this is an example of horizontal growth. Your shop is a household name and your competitor selling vintage aprons has also been successful. You decide to buy the vintage apron shop and offer those aprons in both your dress shop and in the apron shops.
This is a great way to expose your brand to new customers and introduce a new brand for existing customers. You should expect to see greater profits on both sides – especially if you eliminate a competitor.