An expansion plan is a roadmap that defines the strategy that a company must follow to reach well established growth targets, and includes aspects such as:

  • Characteristics of the plan and measures adapted to the needs of the business.
  • Analysis of the viability of the procedures to be carried out.
  • Framework under which it will be developed.

Growth is the goal of all companies. Therefore, if your business is already running and is profitable, maybe you have thought about expanding. To avoid taking unnecessary risks, your best option is to have a detailed plan of how you are going to achieve this growth. This is what is known as an expansion plan, a document that, in addition to the analysis of the company's potential growth, also includes an assessment of its viability, according to its characteristics and the environment in which this growth will take place. If you want to draw up a good expansion plan that allows your company to successfully move into new markets, take these keys points into consideration:

Choose the best expansion strategy

When you decide to take your business to the next level, you have four ways of doing so (as established in theAnsoff matrix):

  • Market penetration: seeks a greater consumption of the current products in current markets.
  • Product development: seeks to offer new products in the markets in which the company currently operates.
  • Market development: consists in offering current products in new markets, increasing the public, and therefore, potential customers. It is possible to opt for approaching new public or sectors, or for geographical expansion.
  • Diversification: the company focuses its efforts on the development of new product in new markets. This is the riskiest expansion strategy.

To develop your business' expansion plan, you must be clear of which strategy you will follow, and from there work on realising it, taking into account all the resources that you will need in the process. In this scenario, there are many companies that choose to conquer foreign markets as their expansion strategy. This is because internationalisation is not just a path for growing your business, but also its integration and diversification.

Information about the company

Your expansion plan must include an executive summary about your company, with a general presentation, describing your business model and goals, and functional aspects such as how many employees it has, how it is organised, what types of products and services it offers, how it operates on a daily basis, etc. You must also state the reasons why you are planning the expansion and the chosen growth strategy, as well as general information about the project.

If you are going to move into foreign markets, you will find this information very useful to assess the export capacity of your company and the structure and resources that you have to face this international adventure.

What are the strengths of your business?

Before taking on any growth strategy, it is highly recommendable to know the advantages of your company over the competition, as well as all the factors that made it a profitable and stable company. No doubt, there will be more than one aspect, but they must all be included in the expansion plan. For example:

  • An analysis of the products and services that made your company a success.
  • Its advantages over the competition, i.e. the features that make your business unique in its sector.
  • The business goals and successes that it has attained since the start.
  • Information about your management team: people make businesses, which is why you must emphasise the advantages that your company has in this aspect. Prepare a detailed presentation about who they are, their training and skills, and their achievements within the company.

Market description and research

The expansion plan must include the type of market in which the company is going to operate, the difficulties it may come across and the best way to sell in said market. And what better way to know this than doing a study on it, including a description by demographic variables and an analysis of the competition. All this information will help you to draw up a positioning strategy for your product and to know the most suitable location for it.

If you have decided to internationalise your company, one of the most important points will be to choose the market in which you want to operate, which is not always easy since you have more than 200 countries to choose from. To this end, there is not a sole answer, and it's best to base your decision on key data and analyses of potential markets.

In this point, prioritisation is another of the aspects that you must take into account when exporting. Focus your efforts on one or two markets and plan the internationalisation on them. Once consolidated, you can focus on new countries.

Goals:

Having a clear goal helps to know where your company should be headed and how to achieve it, without forgetting that you can use it later to measure results. The expansion plan must include all the goals that you expect to fulfil, both in terms of business growth and in the different departments. This includes on an individual level, thus involving everyone who forms part of the company.

Development of the action plan:

Once you know the situation of your company and the goals, you need to describe the different actions that will be undertook to carry out this expansion, whether international or another type. This is the time to analyse the tools that your company will use to reach its goals, such as hiring staff for the new departments or activities (if applicable), expanding or modifying your company's premises or acquiring new machinery or tools. In this regard, your expansion plan must include financial and investment details or marketing actions, with the following documents:

  • Investments and expenses plan: this section must include the expenses that are expected to be incurred in the next two or three years as a result of the expansion, whether this is the purchase of new machinery, expanding the team of staff, opening new premises, research and study of the new market, promotional material or advertising and public relations expenses.
  • Financial plan: needed to be able to develop the investment plan and that covers the forecast of capital needs to be able to expand the company. In this section you must describe the own funds you have available, and the external funds you will request for the expansion. You must also state what items will be financed.

In the case of an international expansion, this financing plan will also include aspects such as the tax regime of the country you are going to export to or any incentives there may be when setting up in a region.

  • Marketing plan: This must include all the information related with the product, price, promotion and distribution that will be necessary to reach your expansion goal. In this point you must plan how you will sell your products in the foreign market, so you must take into account the barriers that may be caused by the language or cultural differences.

A good presentation

That's essential. The expansion plan is not a document that is later put in a draw and forgotten about. Very much the opposite. For you and for all the members of your company, the expansion plan will be like a memory that will remind you of everything you have achieved to date and will be used as a guide to expand the business from a firm base and following recommendations.

Almost, you must not forget that the expansion plan is the document that, when searching for resources in the market, you will present to possible investors, banks or other companies with which you are seeking collaboration. Along these lines, aware of the importance of knowing the key points of each country for your company to triumph there (key points that are not always known), Banco Santander offers you a series of solutions based on its extensive experience and foreign presence, with which to facilitate the growth and internationalism of your company. It also provides you with different services for your international business, that range from lending you money for your projects and helping you with exchanging currencies, to connecting you with a wide range of professionals. Our only intention is to help all businesses and break down barriers.

Once the expansion plan has been drawn up, you just have to work on conquering new markets. Follow it step by step, because taking on these new challenges can bring you great rewards. And to ensure that your international strategy is a success, here is some final advise that you shouldn't forget:

  • Adapt to the new market: the products, services, commercial process and documentation must not only be in the language of the target market, it must also be adapted to its values, culture and needs.
  • Inform yourself about the country's regulations: you must know the legislation of the new market, to see whether it is suitable for your expansion plans. You must take into account tax laws, customs regulations and import restrictions, without forgetting other kinds of aspects such as payment methods, currencies and transport.
  • Preparation and training: Train your team with specialised courses on export or foreign trade to acquire extra global knowledge, resulting in a higher degree of involvement of all your human resources.
  • Think long-term. Conquering a new market does not take place overnight. It requires time, and as such, patience, flexibility and the ability to listen to your new public.

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