Ways of Expanding Business
Every business wants to expand.
This article is helpful for those you are into the retail business of either apparel, consumer goods or services, food & beverages, education, and healthcare & wellness.
The motive behind this blog is purely to create awareness. After meeting people from the retail business and answering their main question on how to expand, here I’ve put across my crisp views on expansion
Expansion for retails here means to create footprints in the geography and to generate revenue. Expansion can be done organically by opening multiple stores either by own or by the support of others, or inorganically by acquiring a brand which has a strong presence in the market.
Expansion through organically or inorganically in both the case there is a cost involved which is both transactional and time-based. This blog will cover only the organic part.
“Growth is never by mere chance; it is the result of forces working together.”
— James Cash Penney, founder, JC Penney
This is the right quote in the context because as expansion is never by mere chance rather a strong business plan based on the strength and weakness. Just by thinking overnight no one can expand their business. Every business has its own strengths and weaknesses, and this should be clearly identified so that a business should not fail due to the poor expansion.
From the above images, we are well-versed with these names and may have also experienced their service or used their products. Since we want to create a strong footprint locally, nationally or globally you require to have strong operational capability and strong product or service.
So let’s understand how we can expand organically and these brands have proved that you can expand based on the business plan and strategy.
Franchising
Franchising is an agreement between two parties called franchisor and franchisee. The franchisor is the brand-owner and the franchisee is the one who acquires the right to use trademark and brand name by paying one-time franchise fees and also royalty or commission or revenue share. The franchisor creates an operations plan and brand identity which franchisee has to obey based on the contractual agreements signed between the two parties which clearly highlights all the terms and conditions.
Licensing
Licensing is a contractual agreement between two parties, where the brand owner grants another company or party the rights to use its intellectual property rights, i.e. manufacturing process, brand name, copyright, trademark, patent, technology, trade secret, etc. for the specified duration under specified consideration. The brand changes licensing fees and revenue share on the product sales
Own Outlet(s)
The discussed two models of expansion are were the third parties are involved in the investment to expand the brand based on the brand terms and conditions. In this case, the brand is totally dependent on the third party(s). Also, the revenue received is a share agreed upon as per the agreement.
However, in the case of its own outlet(s) expansion, the investment and revenue everything is part of the brand.
Joint Venture(s)
Joint Venture(s) as its called JV is a business agreement two brands or two parties to pool together their resources, intellectual property, process, etc. to create a new brand and/or create brand expansion with the support of the local brand or party.
In this model, it could be a commercial agreement or local legal requirement for expansion.
Selecting the right expansion model should be a planned decision and the same should be considered in the business plan and process. Expansion is a crucial decision and should be based on business strength and weakness
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