If you are a CEO or a Business Development VP looking to take your company to new heights, congratulations, you have landed on the right article. At this point, you are probably wondering how you can plan your growth strategies by entering a new market sometime in the future.
Businesses need to plan expansionist strategies for multiple reasons. For some businesses, they have already tapped into their existing market setup and are experiencing saturation. To engineer growth, they require new markets, customers, and opportunities.
Expanding your business operations in a new territory can be both exciting as well as challenging. If you get it right, nothing is stopping you to grow your sales, profits, and revenues. If you get it wrong, you can wipe out millions in the failed experiment.
In this article, we are going to help businesses plan their growth and expansion. Specifically, we are going to list down five important ways businesses should assess the potential of a new market.
List of 5 Ways to Assess the Potential of a New Market for Business Expansion
Start with Defining the Market
You might think that this is something pretty obvious. Well, it is best to scratch the superficial surface and explore what is deep down. Defining the market means multiple things. For example, you need to look at the population, spending power, geographical and territorial location, aligned interests between the brand and the population, etc. among other things. This is something that successful businesses invest in for months or even years.
Invest in Detailed Market Analysis and Research
Once you have defined the market, you need to move on to the critical analysis. This means breaking down the market into several segments and compartments. Identify your competitors, their plus points, and their negatives. Move on to analyzing the barriers to entry that the new market might have (high taxes, low skilled labor, etc.). Finally, you need to work with economists and analysts to understand projected growth, demands, and forecasts.
Understand your Internal Capabilities and Resources
If you are an American business looking to expand to Dubai, your business lawyers might not be able to help you. A leading law firm in DIFC might be a better option. We shared this example to demonstrate why businesses need to be sure about their internal capabilities. Whether you will be able to execute the expansion, supply the necessary professionals, send them over, etc. are important topics that need to be answered before you move forward.
Make a List of New Markets and Prioritize them according to Pros and Cons
At no point during your planning stage should you look to just work on one market? At the bare minimum, you should have at least three markets lined up. You need to create a list of pros and cons and weigh them rationally and objectively. Depend more on numbers and facts than on conjectures and hypotheses. Laying everything and breaking it down to data will help your business make an informed decision. This should not be ignored by the business.
Decide on how you would want to Enter the New Market
Businesses choose multiple options when it comes to entering new markets. They either look to dive into their own assets and capital and start organic operations from scratch. Or, they look to work through a series of acquisitions in their niche to get a head start in the new market. The local player already has knowledge and understanding of the market. A third way is to work through franchises if you are a business that has such a model in place.
The Bottom Line
There is a very fine line between being cautious and risky when it comes to planning expansion strategies in new markets. Moreover, what works for one business might not help some other business with the same desired level of results. There are n number of factors that play a critical and integral part in the process. Make sure you do your due diligence before planning.
All big and successful multinationals have planned growth strategies by expanding to new markets. It would be safe to say that planning something so important is both a science, as well as an art! If you would like us to assist you in setting up a new business in Dubai, please reach out to us in the comments section. Our experts will take you through the process right away.