Always be prepared! Every expansion is a unique case, but there are best practices you should follow before making a decision. Unsurprisingly, all of the best practices include substantial research because the more information you have the better your final expansion decision will be.
Here are some common steps companies take when planning an expansion:
Define your expansion objective
It may seem obvious but, before putting significant time and resources into preparing for an expansion, you should identify the objective you hope to address through expansion. Are you looking for cost advantages? Talent? Research help? Are you looking for all three? If so, what priority order would you put them in?
You know your business better than anyone does and you know the shortcomings of your current location. Self-reflection can help you identify the roadblocks to your company’s growth, bringing greater focus to your expansion plans.
Identify the expansion strategy that fits
Your expansion strategy should be an extension of your expansion objective. What is the best method of achieving your objective through expansion? The options include everything from a small sales-focused team to a research/innovation-oriented office to a full-scale operation. The strategy you choose should reflect the unique location advantages – cost, talent, research expertise, etc. – you hope to leverage through expansion.
For example, if you’re looking to maximize cost advantages, you could consider a significant expansion that sees much of your workforce shifted to a lower-cost jurisdiction. If you’re merely looking to tap into local research expertise in order to address an specific gap in your product/service offering, the most prudent course may be a low-risk, small-scale innovation outpost. If you need talent and are looking to tap into a strong talent market the best approach might be to establish a small local office with the intent to grow it over time through local recruitment.
Create a long list
Toss everything out there. Add every community that could help you achieve your objective to a long list. For example, if you are looking to build your tech workforce, figure out which communities have the best computer science and engineering schools and put them on the list. Look at tech ranking reports, like CBRE’s annual “Scoring Tech Talent” report, and see which cities they have listed – add them to your list. You can follow the same process for research expertise, ecosystem, location/market access and cost regardless of your industry.
Economic development corporation websites are also a great place to collect this type of information.
Depending on your needs, your long list might be quite long or you may find that only a handful of communities have any hope of helping you meet your expansion objective.
Create a short list
Now that you have a long list, it’s time to start narrowing your options. Create a scoring system for all of the variables that factor into your expansion decision, weighted by priority. First, evaluate the possible locations based on your stated objective. Eliminate those options that do not appear to meet your needs under greater scrutiny. Next, score the remaining locations on additional variables that are important to you. For example, your primary objective might be access to tech talent, but a secondary objective might be to minimize costs – this will help you remove high-cost jurisdictions.
Remember to consider qualitative variables – like culture, ecosystem, political stability and economic stability – as well as direct business variables like talent, cost and market access.
Economic development corporations exist to help you find relevant information about their community. Do not hesitate to contact the local corporation to ask for relevant statistics or other details that can help narrow your search.
Visit the top three options
Once you narrow your choices to your top three, you should be confident that your business could find success in any one of the locations.
Visit each location to a) confirm that the community meets expectations, b) make connections with local business leaders and support services, and c) get a first-hand feel for culture and geography. We’ve all booked a hotel with great amenities only to find out it wasn’t everything we’d expected – you don’t want this to happen when you initiate a business expansion.
Tap into the local business community
Before making a final decision, connect with local business leaders who work in a similar industry and/or have had similar experiences with starting/growing/expanding a business in the target community. This due diligence will help you avoid possible missteps while also making the process of expansion easier when you do land in the community.
Are you looking to expand your business? Do you want to learn more about Waterloo? Contact the Waterloo EDC team! We’re here to help.