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M&A Lawyer and the Strategic Expansion of Your Business

by | September 2, 2016

Most business owners I talk with these days are feeling pretty good about the opportunities for their businesses and the likelihood of revenue growth this year.  Although this shift is positive for businesses, it’s a little different than business expansion- it’s really just a reflection of what seems to be an economic expansion.  Business expansion must include a plan, a strategic approach to how a business will take proactive steps to grow.

Often, we think of this in the context of expansion tactics – performing acquisitions, or moving into a new geographical or product market.  However, before a business gets to this tactical stage, it must determine strategically what makes expansion viable for the business. This work includes what is the company’s “secret sauce” or strategic advantage and the needs and risks of expansion.  For instance, if a company’s strategic advantage is its ability to innovate, the company must consider what creates that innovation advantage for the business and whether it can be leveraged or replicated. Based on its needs and resources, the innovative company may consider an expansion in new products and services or possibly it may consider moving into a new geographical area or industry.

The right approach to expansion is opportunistic but also requires planning.  Jumping into a new tactic without an understanding of what will make the business successful will significantly increase the risk of taking that step.  Below are a few key questions to ask yourself in the strategic expansion process:

  • What is your company’s strategic advantage or “secret sauce”?  What makes customers come to you versus one of your competitors?
  • Is the strategic advantage driven by or dependent upon one individual or a small group?
  • Who are the company’s ideal customers?  What defines them (industry, size, region, needs)?
  • What do the customers value in working with the business?
  • What else do these customers need?
  • Are there other potential customers who have a similar profile and needs?  Why are they not working with the business?

Without this knowledge, a business cannot make an informed decision about expansion.  It might reasonably gauge that one tactic is viable but it will not have fully evaluated the marketplace it serves to select the best approach for its expansion and long term growth.