Many growing businesses reach a point where they start to outgrow their current market. Perhaps you’ve already managed to capture a large chunk of customers in your local area. Maybe your regional business has grown to become the top choice in your category. Whatever the case, you may find yourself exploring the possibility of expanding beyond your region and going national.
This article will shed light on the best practices that companies should follow when scaling their regional operations to the national level. Specifically, we’ll discuss the top considerations in the following areas:
- Existing capabilities and demand
- Capital and resources
- Supply chain and distribution
- Inventory management
- Technology
- Marketing
- Store management
Have a look and below, and see how you can apply them in your expansion plans.
Existing capabilities and demand
On time, in full, at every site
Before setting up shop in other regions, you should first assess whether or not you are capable of doing so.
Start with your processes and policies
If you already scaled regionally, chances are you have existing, repeatable policies and processes across your regional locations. While having such procedures is a good start, they will be put to the test when you implement them nationally.
So, evaluate your processes and determine if they can be repeated in other states and regions. Be mindful of major distinctions between different locations. Remember that laws, climates, and cultures will vary from one state to another, and you may need to adjust your processes so they work in other regions.
Hire a local professional who can shed light on the differences between your existing region and the area where you’re planning to expand. Identify any policies and processes that need to be reworked or adjusted and go from there.
Assess and create demand
You should also assess product demand in other regions. You may be the go-to provider in a specific city or state, but that same demand may not be as strong out of state. If this is the case, have a plan for generating demand. Map out marketing campaigns so you can drive brand awareness in other regions and tap into new markets.
Regional retail businesses that want to expand nationally must first “create demand for their product or service outside of their regional market,” says Farhan Advani, Director Marketing of Buy Here Pay Here.
“Once there’s enough demand, they need to establish company infrastructure that can support expansion into multiple regions. It’s also important that this infrastructure be streamlined into their production network to ensure that they can deliver their product or service without suffering from inefficiencies,” Advani adds.
Capital and resources
You should also ensure that you have enough resources to support your strategy. Consider the following advice from the experts.
Determine your funding sources
“Funding is the foremost thing you need to have,” says Axel Hernborg CEO of Tripplo. “Find investors who are willing to invest in your business to make your vision come true.”
In addition to investor funding, there are other methods of acquiring capital including obtaining business loans or lines of credit and using internally-generated funds.
Then there are non-traditional ways of raising capital. Some businesses, for example, have used crowdfunding to support their expansion plans. When the restaurant Travail Kitchen & Amusements needed funds to support its relocation and expansion initiatives, the company turned to Kickstarter and raised over $255,000 from nearly 1,100 backers (as seen below).
The right funding method depends on your situation; but whatever you decide, see to it that you have a good idea of how much expansion is going to cost and how you’re going to obtain (and in some cases, payback) the necessary funds.
Form partnerships with other businesses
Partnering with other entities may also be a good option, says Yana Trihub, Chief Executive Officer at KeyUA.
“It would be better if you invite fellow entrepreneurs for business partnerships so you don’t have to bear all the weight on yourself. It’ll be easier to scale your business up this way with more people and workforce.”
Supply chain and inventory management
Supply chain management at the national level comes with a lot more challenges and complexity, which is why you should carefully craft a strategy that ensures your products make it to the right locations and the most optimal time.
Map out your supply chain and distribution
“Supply chain management is a common problem that many retail businesses have had to deal with, especially during this pandemic. And if there is one thing to take away from this experience, it is that there are many aspects that you need to work to optimize,” says Eden Cheng Co-Founder at PeopleFinderFree.
To be successful at expanding nationally, you quite literally have to map out your supply chain management and distribution.
As Cheng puts it, “This means carefully assessing the location where you manufacture or purchase from, the amount of stock you keep on hand, and transportation.”
Also, remember that a well-planned-out supply chain strategy is critical, particularly in today’s environment. With many supply chains facing shortages and delays, careful forward planning, along with agility, is a must.
Take, for example, Target, which enlisted its own cargo ship and hired thousands of additional employees to ensure that smooth flow of goods to its thousands of stores across the country.
“I think we have been seeing supply-chain challenges throughout the pandemic. Whether that is closures in Asia or the slowdown of ports, the challenges with driver shortages in the United States,” Target CEO Brian Cornell said during Yahoo Finance’s All Markets Summit.
“We are currently hiring 30,000 additional team members in our supply-chain system. I think this is going to take quite a bit of time to sort out.”
Image credit: Shutterstock
Bring in vendors with national capabilities
Of course, not every business can be like Target and charter its own cargo ship. This is where having the right vendors will come into play.
As you expand, you must ensure that the vendors who support your supply chain and distribution also have the capabilities to go national.
When storing or transporting merchandise, for example, it’s ideal to partner with vendors who have fleets and facilities across the country versus working with a company that has a limited national presence.
Doing so will make moving products between locations fast and more cost-effective, paving the way for well-stocked locations.
Optimize and localize your inventory
Expanding nationally isn’t just about carrying more products; you should also be thoughtful about which items to stock and where.
“One of the most important aspects of growing your retail business is keeping in mind the need for an increased inventory,” remarks Alex Williams, CFO of FindThisBest. “Inventory distribution according to the sales and demand in each region should also be kept in mind when expanding your business.”
Christian Velitchkov, Co-Founder at Twiz LLC, echoes this and adds that retailers should strive to localize their offerings.
“To expand nationally, one of the biggest things a retail store has to keep in mind is that it will have to cater to the needs of the local retail market. The same product portfolio that works in your hometown, may not work in another state or even another city,” says Velitchkov.
Technology
Your technology needs will also have to grow along with your business. See to it that your tech stack is set up for success by taking these steps.
Choose tech solutions with scale in mind
Use technology platforms that can scale with you. Avoid inflexible or cumbersome solutions (such as most on-premises software) and instead opt for cloud-based systems that make it easy to add more users, accounts, or locations.
Integrate your solutions
As your operations become more complex, it’s increasingly important that you integrate the various systems that you’re using.
As Olivia Tan, Co-founder at CocoFax, points out, “Companies today don’t run off of a single system — they may have a dozen or more systems. If those systems don’t work together, they create silos, which in turn multiply communication and management problems as your company grows.”
This is why it’s so important to ensure that your solutions are able to “talk” to each other. Adopt software applications that integrate with the other tools that you’re using, either through native integrations or an open API. This ensures a smooth data flow from one solution to the next, so you can reduce manual work, human error, and inefficiencies.
Marketing
Marketing — specifically digital marketing — is an essential part of any national expansion, which is why experts recommend ramping up your online presence as you expand.
Invest in SEO and online advertising
“Businesses should change the ways that they market products after expanding nationally, particularly in the realm of online advertising and SEO,” comments Business Growth Strategist Danny Viega.
He continues, “Modern digital marketing is extremely granular, something which all businesses should take advantage of when looking to expand into new markets. This means creating unique pages for each local market (state or city), crafting geographically tailored ads, altering prices to suit state taxes, and investing more into locations that exhibit high levels of demand.”
Store management
When it comes to store management at the national level, the following tips will help you maintain smooth operations across all your locations.
Bring in the right district managers
A district manager — i.e., someone hired to oversee the retail stores within a given area or district — will play a key role in your expansion. As such, it’s important to hire the right people to manage various districts.
Depending on your existing team structure, you could choose to promote people from within. This gives you the advantage of having individuals who are already familiar with how you operate. Just make sure that these team members are willing to travel or relocate to the areas where you’re setting up shop.
Alternatively, hiring externally may be a better option if you’re looking for someone with fresh ideas or if you need people who have localized or regional expertise.
Audit your locations regularly
Regardless of your hiring strategy, ensure that your district managers regularly audit your locations. It’s a must that they conduct in-store visits and inspections to ensure that all your brand guidelines and processes are carried out properly.
You can make this task easier by utilizing a retail audit solution like Bindy. Bindy offers robust tools to aid store inspections, communication, task management, and more. Important information and tools, such as checklists, tasks, conversations, and action items, are all kept on one platform, thus streamlining the way you conduct audits and inspections.
About the author:
Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.
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