How to Expand your Business without Adding Financial Risk
There are several ways to expand your business and market your product without increasing the costs and risks associated with personally opening up new stores and locations.
Some of the ways include:
Distribution agreements where you allow another party to sell your product through pre existing or new retail channels;
Licence Agreements which allow others to market your brand in new territories; Franchising which allows others to replicate your store but have greater control over the system. Every business is different and not all ways will suit your business.
The first step is to work out how strong your brand is, and whether your business can be replicated by another. Franchising simply will not work when the business centres around the relationships created by one person.
Distribution agreements can be a starting point to get your product out there with existing retailers so that your product reach is greater. Ultimately this will translate in greater sales and more profit.
Ensuring that another party sets up or promotes your product might reduce your profit margins, but if successful your volume of product moved and profit should increase. These options mean that the capital costs of establishing new locations is avoided, thereby reducing financial risk whilst increasing your bottom line. It is important to ensure that any third party entitled to use your brand is looking after its value and protecting your reputation. A well worded agreement should be put in place to control the use of your brand and the arrangement with the user of that brand.
You also need to ensure that any agreement has a term which gives opportunity for both parties to recoup their investment and make profit, but allow you scope to take on new business and new markets when the time is right.
