How to ensure a successful business expansion

A significant enlargement, whether at home or abroad, will rarely be straightforward, but there are several preparatory measures you can take to minimise the growing pains and reap the benefits
A woman giving a presentation on business expansion

The task of scaling up a business will always create headaches, not all of which are foreseeable. But the potential rewards awaiting a firm that can overcome the challenges that come with a planned growth spurt are significant.

For Shamil Thakrar, co-founder and CEO of restaurant chain Dishoom, a successful expansion depends on effective quality control. Ensuring a consistent brand identity is crucial, too.

“It’s important that we deepen what we do without diluting it,” says Thakrar, who oversaw the opening of Dishoom’s ninth UK venue last year. “It’s also important not to get so big that you aren’t interesting anyone anymore.”

With those watchwords in mind, here are some more insights to consider from other leaders who have expanded their businesses to great effect in recent years.

Extensive market research is vital

It might sound obvious, but a firm must ascertain that enough demand for its product or service exists in a new market before it commits itself. This calls for painstaking research.

Sarah-Jane McQueen is COO at Candlefox, an Australian educational tech firm that opened offices in the UK in 2018. She stresses that any company must think deeply about whether its offering will hold enough appeal for the new audience it has in mind. “It’s not a case of ‘if we build it, they will come’,” she says.

This factor is particularly pertinent for any firm considering an international expansion, where deep cultural differences may apply. Consider the cautionary tale of Tesco’s failure to crack China. The supermarket giant’s Clubcard scheme did not resonate with Chinese consumers, who tend to shop around instead of trusting one retailer to offer everything they need under one roof.

And local market research, including extensive surveys and site visits, is not something to skimp on even if your intended expansion is domestic, warns Ben McLaughlin, COO at hospitality company Boxpark. Next year, Boxpark is opening its first two sites outside London: the O&M Sheds in Bristol and the Cains Brewery Village in Liverpool.

In the course of its research, the firm evaluated more than 300 potential locations. “This wasn’t just about picking the right city,” McLaughlin explains. “We wanted to take on buildings and locations with interesting architecture, cultural heritage and/or historical significance. They must also be linked to the heart of the local community.” 

Boxpark spent years analysing local economies to inform its pricing policies, while also conducting field research into the cities’ socialising habits

Blend established experience with new local talent

Once it has targeted a new territory, a business will usually need to hire locally. For Bernadette Howlett, MD for global growth at consultancy Palladium, a balanced approach to recruitment is vital. When entering a market, she says, a firm should staff its new operation with at least some existing employees if at all possible, because they will be familiar with the organisation and its objectives. 

When expanding, it’s really important to deepen what you do without diluting it

While Boxpark’s expansion to Bristol and Liverpool aims to create hundreds of job opportunities, McLaughlin confirms that the new general managers at those sites will be required to spend some time at its London HQ to gain a feel for the firm’s history and culture. “Despite our rapid expansion, our [leadership] team is very considerate about maintaining our brand authenticity and protecting its identity,” he says.

For smaller organisations that may not have the option of relocating several existing employees to a new site, McQueen suggests working with local recruitment agencies to hire suitable candidates in the area. Before it set up in the UK, Candlefox spent a long time searching – both on its own and using a headhunter – for someone local who could set the new operation up from scratch.

“We didn’t have the luxury [of bringing several people with us] from Australia,” McQueen recalls. “We had to take a bit of a gamble as to who our initial team members were going to be.” 

Create a consistent brand, but allow for local variations

Brand consistency is key as a business enters new territory. McLaughlin highlights the value of an easily recognisable visual identity. “We’re very precious about our branding,” he says. “We want people walking past and recognising a Boxpark, or for us to be front of mind when they see our signature chevrons somewhere.” 

But this strong design element, McLaughlin adds, is effective only when it’s associated with “a consistently high standard of food and drinks and a memorable customer experience”.

This does not mean that a company should apply a “cookie-cutter” approach at different sites, he stresses. The Boxparks in Liverpool and Bristol may feature the same distinctive decor, but they will tailor their offerings carefully to local preferences. 

“In Bristol, we’ll have a diverse music programme that reflects the city’s vibrant live scene,” McLaughlin explains. “In Liverpool, we’ll focus strongly on our ‘fanpark’ concept to reflect the city’s strong footballing culture. Not everything that works in one place will work in another. But the fundamentals of creating memorable experiences remain the source of truth in every venue we open.” 

Be open to partnerships, mergers and even acquisitions

Not every expansion needs to be a solo effort. When entering a new market abroad, for instance, a firm could consider partnering with a more established local business or even using it as a reseller.

Shirish Nadkarni is a tech entrepreneur who established a mobile email technology called TeamOn Systems, which was acquired by BlackBerry, and then founded language teaching app Livemocha, which Rosetta Stone purchased. Suggesting that mergers and acquisitions should be viewed “constructively”, he says that founder-CEOs need to be aware of their limitations and understand that a carefully chosen business partner might be able to overcome these. 

“BlackBerry decided that our market was strategic and that it made sense to acquire the business,” Nadkarni says, reflecting on the sale of TeamOn Systems. “While we had other funding alternatives, we accepted its offer because it had relationships with most big carriers worldwide and could extend the reach of our technology to millions more consumers.”

Realism should underpin any expansion strategy

There are no hard and fast rules for when a company should expand, but there are key questions its leaders should ask themselves to determine whether enough potential exists and, if so, whether they’re sufficiently well placed to capitalise on it. 

According to McQueen, these include: “Is there a genuine market opportunity for us to exploit? Do we have access to sufficiently skilled people to take on the extra workload? And can we financially afford for the expansion to fall short of expectations?”

Ultimately, companies should not consider expanding into a new market, domestically or internationally, until they can confidently say yes to these questions. 

It’s clear from these experts’ experiences that a strong brand identity is only as effective as a consistently well-delivered offering, there’s no such thing as too much market research – and there’s a difference between selling up and selling out.