5 Tips for Expanding Into New Markets
Expanding into a new markets can be an effective way to grow your business, but it takes a disciplined process to properly assess the potential growth of each opportunity. Entrepreneurs and established businesses alike should be wary of jumping into a new market simply because an opportunity came up, because this is where they falter.After careful deliberation with an entry method in place, Poppin took the leap and expanded into a new market. With two months and a tight budget, we had to design and build out our Los Angeles showroom, just six months after successfully opening our San Francisco showroom (our first West Coast-based presence).By designating an appropriate amount of resources to market research, analysis, and planning you can create a solid foundation for success in a new market.So, how do you start to leverage your core business and finally make the move into a new market? Our CEO Randy Nicolau shares his best tips.
1: Understand Your Customer
“The first step in understanding where you want to expand is understanding your customer.”With expansion on the horizon, it’s important to do a thorough market analysis while considering the demographics, location, common interests, and needs of your target customer.Ask yourself: Does this market have an untapped space? Is there a gap in what that market delivers and what your customers want? This will help you choose your market based on the strategic fit and your ability to serve them.“It’s important to look for pockets in your data sets and have a good commercial, gut sense and think about what you would benefit from in expanding. We had enough e-commerce data to do that and found we were over-indexing in certain markets.”For Poppin, we analyzed our own data to find out that our sweet spot is 50 to 2,000 person companies in the Tech, Advertising, Media, and Information sectors who are also experiencing strong growth. We felt we could best serve the greater Los Angeles area from Santa Monica riding on the success of our existing showrooms in San Francisco’s SoMa District and New York City’s Flatiron neighborhood — both tech hubs within each city, respectively.
2: Align on Strategy
Create an action plan that specifies how you will reach customers and achieve a competitive advantage within the new market. For instance, some companies are moving their call centers to up-and-coming cities like Detroit - where real estate is more affordable and the city has potential to become a future tech hub.For Poppin, we’re constantly thinking about how people work from industry to industry and from region to region. We knew entering the SF area that people are more ergonomically-conscious, so we launched our Sit-Stand Loft Desk in conjunction with opening our San Francisco office and showroom.When searching for a new market to enter, you might find that you are drawn to one or more locations. Before deciding on our exact office space in LA, we were torn between Venice Beach, the Culver City design district, and where we landed - in the heart of Santa Monica. Ultimately, Santa Monica has a vast company density in that area and Venice is still easily accessible. We have a pulse on industry news and can predict that many of the newly minted Snap millionaires may leave and start their own businesses nearby - and we’ll be there to greet them.
3: Assess Internal Capabilities
Decide if you have the sales channels, infrastructure, and customer relationships in place to launch in the new market, and determine where to leverage your core competencies.“Building a sales team in San Francisco was a no-brainer for us. We knew we were already working with companies like Google and Facebook on both coasts, so we listened to the demand.”
4: Identify Resource Needs
Sustaining early market success will depend on identifying resource and skill gaps early on and quickly filling them. Think about what expansion would entail, and how it could affect operations, especially when it comes to managing a new office on a different coast. Some people don't realize the value of an office manager. But that’s why we love the folks at Managed by Q— they make it effortless to manage your office, no matter where you are, especially as you scale.
5: Space Plan and Design
Think about your employee count and what it will look like in 6 months to a year, as this will impact your space planning and overall design. Once you firm up your budget and create your list of “must-haves,” start working with a broker who gives you access to a wide variety of options or try using a platform like Squarefoot.With our expansion, we created a “four wall formula” that’s both cost-effective and replicable, so that we can make our stamp in other cities. To help us scale efficiently, there has to be consistency between everything from office design, signage, to events, all while adding local flairs in each space. In San Francisco, we have a customized Giant Ping-Pong Conference Table, and in Santa Monica, we’ll be showcasing a lot of our new “millennial pink” furniture.Of course, these tips aren’t an exact “recipe for success,” but the investment of time and resources into these preliminary steps should help you mitigate the risk of entering into a new market.