Six Tips For Expanding A Homegrown Business As businesses prosper through growth, entrepreneurs are driven by their passion to excel and expand their businesses.
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As businesses prosper through growth, entrepreneurs are driven by their passion to excel and expand their businesses. Building and maintaining a local customer base may be the first step on the road to success, but having growth potential and becoming an international company is a significant feat that not all those who set out to accomplish it achieve. Ultimately, what differentiates even the most successful companies is the vision that drives them. A company's vision should guide and align every decision and facet of business, well before a growth strategy has been defined and expansion plans embarked on.
When the inflection point for growth does arrive -whether achieved through increasing the number of revenue streams, number of products and customer segments, or expanding into new geographical locations- a business' ultimate objective should be to build a stronger business model that can withstand economic downturns and dynamically adapt to new market trends and changing business environments.
Consider, for instance, Intercoil International's expansion into the Kingdom of Saudi Arabia. Backed by solid feasibility forecasts, effective planning and a confidence in the market potential, our company's ongoing expansion in Saudi Arabia signified a further step in our homegrown company's long-term vision to become an international player in the bedding industry. A thriving real estate market, increasing religious tourism numbers and strong demand for premium bedding products have driven Saudi Arabian industry growth, warranting considerable investment and increased commitment from Intercoil International in the Kingdom. But this was not done entirely without challenge or setback, and below are some lessons we learned along the way for tackling international expansion.
1. Brace to beat the system.
Many entrepreneurs believe setting up legal entities in the region can be challenging, although we believe it is a lot easier here compared to several other parts of the world where the laws are more stringent and sometimes even flawed. One should not be cowed by the legislative challenges as a reason to not expand. If geographical expansion is a key route to drive growth, one must be resolute in finding ways to overcome them to set up bases in new geographies.
2. Start lean.
While the initial temptation to set up a larger infrastructure due to economies of scale can be strong, we believe entering lean is the best approach. Take for example setting up distribution centers in new markets. Outsourcing logistics and implementing an effective just-in-time (JIT) inventory approach allowed us to capitalize on warehouse space and increase efficiency while decreasing waste and associated inventory costs. Obviously this requires a strong understanding of the market, customers and forecast of demands, so be sure to have an innate understanding before expanding. Once a business grows and justifies scaling up, be prudent in building in-house capacities and resources.
3. Nurture talent.
Good talent can be hard to find, so it is important to nurture available skills and hone them for higher roles. People in charge of all our branches have grown from within and they have a strong appreciation of where we have come from and where our vision is directing us towards in the future. While we continue to introduce new talent into the company and benefitting from expertise and best practices from other industries, growing internal talent sets that culture of reward that makes good talent more likely to stay with us longer.
4. Maintain a long-term vision.
In a world where economic boom and bust is becoming more frequent and investments are being made with greater caution, it is all the more important to look beyond the short-term economic cycles and gauge opportunities that lie further ahead. The Kingdom of Saudi Arabia may be going through a short-term dip due to various politico-economic vagaries at the moment, but we believe it is a market that is fundamentally strong and will continue to remain one of, if not the most important potential markets in the region for us.
5. Respond to local opportunities.
For a company founded in the Middle East, we have sufficient opportunities to expand in the region. Religious tourism in Saudi Arabia continues to grow and the Kingdom is building significant infrastructure to support it. Strengthening our presence with a new factory was a logical step forward and we are confident our hospitality clients will appreciate our ability to respond efficiently to their requirements.
6. Grow revenue streams.
The Kingdom is an important market for hospitality and hotels, but it is equally an important retail market. Our new factory in Saudi Arabia enables us to serve our trading and retail partners even more effectively and efficiently- we offer them the advantages of stockholding and JIT deliveries that provide logistical and cost advantages.
In the end, it really comes down to recognizing market potential, knowing your capabilities, and assessing the opportunity cost of not expanding. If something does not challenge you, it most likely will not change you, so take a risk. But make it an educated one.
