If a business is already successful, surely growth and expansion come naturally, even easily? Growth may be forced upon a booming business in order to capture and benefit from an expanding customer base. Without expansion, even the most well-conceived business can plateau, stagnate and decline over time. 

Growth itself does not come without risk. A poorly conceived expansion which fails to incorporate the original theme of the core diversification can not only flounder but potentially reverse the fortunes of the original enterprise. However, with innovation, growth is possible by appealing to new customers with new attractions, more convenient routes to market and adaptations to appeal to emerging consumers. 

Developing an already successful business can be a difficult line to walk; balancing the need to innovate with the risk of over-expansion. In truth, business growth simply needs to be approached with the same mindset that was employed when first diversifying, as though the expansion is a new business unto itself.  

Start again

For any business venture, doing the groundwork is essential. An existing business has probably established a clear identity by virtue of its heritage, location, values or all manner of other factors. Though this identity is already established, it must not be neglected when scaling up. Indeed, it should again form the cornerstone of decisions when expanding and growing. All too often, growth comes at the expense of the established identity and set of values.

Identity is essential, but business fundamentals such as funding, management and tax cannot be ignored. Here is a basic checklist of what should be considered as a priority:

• Customers: What is the potential of the expanded enterprise? Who are the customers and what do they want? While existing customers may also be interested in the new venture, attracting new faces and therefore adding value to the offering should be a priority.
• Infrastructure and geography: Are your potential customers able to reach the venue? Also consider alternative routes to market such as local makers markets or online retail opportunities. Poor physical infrastructure can be circumvented. 
• Footfall management: Whether virtual or physical, measures should be in place to deal with increased footfall in the future. 
• Planning: Will planning permission be required? Changes to permitted development rights have opened up alternative opportunities for smaller-scale diversifications to be more easily pursued. 
• Funding: In the current inflationary environment, grant funding can be particularly invaluable in minimising long-term costs or reducing financial risk.
• Professional advice: A raft of taxation considerations, legal implications and rating changes can impact on diversification. The complexity of these issues means professional advice can be worthwhile to both avoid the pitfalls and identify the benefits.

Rinse and repeat

Though a ‘start-up’ approach is required each time, this can be repeatedly applied to the same original business again and again, as and when required. Cobbs Farm Shop, a case study featured in our Spotlight on Rural Tourism and Leisure, has established a farm shop in Hungerford that is now also accompanied by a butchery and kitchen. 

In addition to the original site, a transferable model means the Cobbs Farm Shop business has expanded to create five separate farm shops from Stratford-upon-Avon to Winchester to the outskirts of Reading. Crucially, each farm shop is based upon the common principle of supplying quality food with provenance to customers, tapping into local artisanal producers to provide that supply.

Diversification therefore requires a central theme that is unique to the core enterprise. Subsequent expansion should not lose sight of that theme. Rather, the additional enterprises should seek to appeal to a different but complementary audience building on the established brand. 

Further information

Contact Simon Foster or Joe Lloyd