Want all of the information on this page and more in one handy resource? We’ve got you covered. That’s why we made The Entrepreneur’s Guide to growing and scaling a business: expansion, a free downloadable guide full of expert advice, handy templates and rich resources. Save it to your computer, and have this guide on hand as you look to expand your business.
Albertan business owners, we think congratulations is in order. You’ve done it—you’ve built your business (that’s no easy task!), and now you’re looking to grow and scale your business through expansion. We’ve collected information from all kinds of industry experts and resources to give you an in-depth look at key considerations around expansion and your business. Here’s an overview of the topics we’ll cover:
- You’re officially ready to grow your business
- Growing your business: how to get started
- Factors to consider when opening a new location
- Tips to grow your business online
- Identifying new target markets
- How to get your product into retail stores
- The ins and outs of launching a new product
- The opportunities behind franchising your business
- Business beyond provincial borders: expanding across Canada
- Exporting products to the US
- Import/Export: indirect taxes and transfer pricing
- Increasing market share
You’re officially ready to grow your business
With Anton Bellot, ATB’s Senior Manager of Entrepreneurship.
Want to know what banks look for to see if you’re ready to grow your business? Here are Anton’s top five factors he tells small and medium enterprises looking to expand:
- Current financial state: having a track record of positive cash flow sets you up well.
- Type of growth: what type of growth are you thinking and why?
- Sales cycle & cash flow: do you have the cash flow to sustain your planned expansion?
- Market demand: where is your need for expansion coming from? It should always be from your customers.
- Flexibility: be open to other options for expansion if your dream growth option just isn’t financially realistic right now.
Having the right team by your side as you consider expansion can make or break your success. Here are the four people you should talk to when looking to grow your business.
Growing your business: how to get started
How do you start the process of expanding your business? The concept of exciting, but when there’s so much to do, where do you start?
Enter: the Tornado Method. What’s that? It’s a framework to build and grow a business that any entrepreneur can use at any stage. How do you know if it’s right for you? Well, unless you have a complete management team responsible for each area of your business, then you can probably make your life easier by integrating this framework into your business strategy.
The Tornado Method helps you prioritize all of the tasks you’re juggling and organize them into 11 elements organized into three layers.
Factors to consider when opening a new location
So you already have one brick and mortar location for your business, and you’re thinking about opening a second location. How do you know if the time is right to grow your business with a second location? Here are 7 tips for expanding to help you along the way.
- Document everything you do: make sure you record all of your processes, so you can hand them off to a new owner.
- Market research is key: identify areas that are prime for your new location.
- Seek out great business partners: you’ll want someone native to the area and has more expertise than you.
- Be risk-averse: don’t risk compromising the quality and integrity of your business to expand.
- Listen: listen to your customers and staff—they’ll know your weaknesses.
- Be as certain as you can be of your success: do your research and don’t move forward unless you’re confident.
- Don’t outgrow yourself: never sacrifice quality of service for quantity.
Tips to grow your business online
Building your own ecommerce website is easier than ever, thanks to platforms like Shopify, Squarespace and Wordpress, which help entrepreneurs expand for essentially no money. But here are some things to consider before expanding your business online:
- If you’re selling wholesale, make sure your wholesale clients know you’re going to have an online presence.
- Know how you’re going to take care of packaging and shipping.
- Do your SEO research before starting, so you can create a website that customers can actually find.
- Keep in mind who your new customers will be if you expand online. If you’re just creating a different way for your current customers to shop, then it might not help you grow your business.
10 steps to expand your business online
- Identify your target audience: a basic understanding of what, how and when your customer wants to interact with your product can provide you with a persona which you can use to inform your site’s design.
- Choose your platform: you’ll need to decide between a software as a service (SaaS)/hosted platform or a self-hosted platform.
- Select initial products to place online: go through some trial and error to see which of your products sell best online.
- Learn what the competition is doing: it’s important to understand who is trying to market to the same people that you are.
- Take pictures of your inventory: it’s essential to post high-quality images of your inventory—that’s the only visual customers have to go off of to help them decide whether to commit to buying from you.
- Deliver the “WOW”: details matter with ecommerce. Your packaging is one of the few touchpoints you have with your customer on ecommerce, and should be used to “wow” them.
- Choose your payment methods: you’ll need to know if your payment system accepts the payment methods your customers use, if it’s affordable for you, and if it’s secure.
- Take care of your security and tax details: like a brick and mortar location, your online store needs to be tax compliant. You’ll also need to protect your customers data in case of data breaches.
- Drive traffic with SEO: drive organic traffic to your website (for free) by optimizing your URL, being mindful of your domain name, and doing your keyword research.
- Create pages that rank: make sure you have relevant keywords on your webpages, and create quality content that will allow you to rank.
Identifying new target markets
As you look to expand your customer base, how do you identify new target markets? Well, it all comes back to what you did when you first started your business: market research. That’s how you identify a market’s needs, and figure out if your business is the right fit to meet them. If yes, awesome! You’ve found a new market. If not, keep on researching. Here are some tips on market research to refresh yourself on how to find a new target market:
- Ask your customers (and potential customers) a LOT of questions. Create polls on social media, grow your email list and send surveys, talk to the people you want to serve wherever they’re at to find out what they like and what they want.
- Read up on what you can, whether that’s industry magazines, textbooks or online industry reports.
- Don’t be afraid of a little bit of trial and error. Test out ideas that you think will appeal to a new audience based on your research to see what they think, and make adjustments based on their feedback—just make sure it’s a minimum viable product and doesn’t cost you and your business too much time and money.
Targeting a new market while keeping your current one as you expand your business
We’re willing to bet that you’re expanding (at least in-part) to get more customers. Who doesn’t want that for their business? But it’s easy to forget about your loyal fans when you’re trying to attract new people to your business. What’s an entrepreneur to do? We have some good news—you can still serve your die-hard followers while attracting new customers. Here are four tips:
1. Create (and use) in-depth personas
Personas are richly detailed, research-informed fictional characters that you create to represent a group of people who’d buy your products or services. You can create different personas for your different target markets, so you can craft your offerings to serve multiple types of customers.
Want a little bit more help on creating a persona? Check out our entrepreneur’s guide to expansion. It has more detail, resources, plus everything you’d want to know to help you expand your business.
2. Focus on how you meet their needs (and wants)
Meet your audiences wherever they’re at, whether it’s on Instagram, Facebook, or the local paper. You can diversify your offerings or mediums to meet the wants and preferences of new audiences so they feel seen and understood, while not eliminating what your current audience loves.
3. Use customized messaging
Tailor your marketing to speak to your loyal fans, and new customers. You can create separate messages that different target markets can relate to.
4. Reward loyalty
Say “thank you” to your customers who come back again and again to support your business through exclusive events, offers, discounts or memberships.
Learn what Routine Cream did to expand their business and achieve international success.
How to get your product into retail stores
There’s something exciting about the idea of seeing your product in a brick and mortar location—but getting your product into a retail store doesn’t come easily. Good thing you’re an entrepreneur—you’ve got the grit to go for it! To help you on your journey into retail distribution, we wanted to give you some insider tips.
7 tips to getting a retail partner
- Make sure you get to talk to the right person: call ahead to make sure the owner or category manager is in.
- Try to set up a meeting with the person you need to talk to.
- Get a name and contact information for the category manager or owner, and then follow up, follow up, and follow up!
- When you finally get that meeting, you’ll need your sell sheet and your product (sample or full size) for them to take and try.
- Honestly, it’s all about timing. Different product categories are treated differently, differing customer demographics determine which stores make the most sense to sell at, and product cycles are different for each product type and store.
- The competition is fierce, so find a way to stand out. Your product needs to be revolutionary, or you need to sell your story.
- At the end of the day, do your best to prepare yourself and don’t ever give up.
Want to hear about what it takes to get your product on the shelves of a retail space from both the retailer’s and entrepreneur’s perspective? Download our guide to expansion to get the full details, plus tons of content on key considerations for expanding your business.
The ins and outs of creating a new product
Maybe you’re ready to expand the products you offer by developing a new product. Before you get started, here are our recommended steps to help your product development succeed:
- Make sure that your product development team is solid: even if you’re the one leading, having a visionary team is necessary to turn this concept into reality.
- Do you have the budget? You’ll need to know to make sure you have the funds to see it to completion, and that you can pay your staff.
- Do your market research: see what your competition is doing and make sure your new product addresses a pain point.
- Always be thinking about your customer: create a new persona for this new product, and set up a way to test the product with your customers to get feedback.
- Make sure you have a plan in place to manage your new inventory
- Write down your process: this way, you don’t have to reinvent the wheel next time you create a new product.
Opportunities behind franchising your own business
Expanding your business through franchising is a great option. Our first piece of franchising advice? Your business could be a great fit for franchising if you already have three to five locations that are thriving and a lot of your customers are requesting that you open in different cities or provinces.
Make sure you’re ready to franchise your business by familiarizing yourself with three documents:
Franchise disclosure document (FDD)
Each franchise has to have an FDD that states everything about the business and be licensed
in each province they plan on operating their franchise in. A lawyer can help you draw up an FDD. Your business industry, how many provinces you plan on entering, and how many current locations you have will determine how much this will cost (anywhere from $5,000 to $50,000).
This document is mandatory—this is what your franchisees will be signing. Keep in mind that your franchise agreement should be drafted by a lawyer.
Your operating manual will also need to be created and reviewed by a lawyer. It should include your rules, regulations and guidelines on how to run a franchise location of your business.
We’ve shared a few more considerations for franchising in our entrepreneur’s guide to expansion. And bonus: it has tons of other helpful information you’ll want to know to expand your business. Download it for free and keep it as a handy reference.
Business beyond provincial borders: expanding across Canada
With Glenn Willis, CPA, CA, CPA, CMA, Partner, Tax Services, MNP LLP.
So you’re looking to expand your business outside of Alberta—it’s exciting to think about how your business could operate across different provinces. Don’t let sneaky taxes get in the way of your business’s growth or dampen your excitement. Here are some tax tips for you to keep in mind as you expand your business.
Each province has its own set of rules and regulations when it comes to taxes. No matter the province, you’ll need to be thinking about income tax, sales tax, and property tax as a baseline. You’ll need to be on top of each province's tax rates, so you can collect the proper amount. The consequences of an error in sales-based taxes are significant and can add up.
Some other taxes to keep in mind are property and land-transfer tax. Property, unlike other taxes, are set by the municipality. Knowing which tax applies where and keeping track of the opportunities for refunds or tax credits can have a significant impact on your overall expansion plan.
Want to get a deeper dive into how to expand your business outside of Alberta? Glenn shares more details in our guide to expansion, including the tax implications of opening an office in a new province.
Exporting products to the US
Thinking about sending your products down south? Here are our top three exporting tips, along with links to required export documentation, for growing businesses looking to get their products across the US border:
Find out if your products are NAFTA (North American Free Trade Agreement) eligible.
If your goods are manufactured in North America there’s a good chance they are eligible, but it’s always a smart idea to double check with your brokerage company. If your products are NAFTA eligible, fill out the B232 - Certificate of Origin and file it before you ship your products and you’ll save a lot in duties.
Put a continuous transaction bond in place.
Every time you ship across the US border you have to pay a $50 single entry bond, which can quickly add up if you’re sending packages frequently. But if you put a continuous transaction bond in place, it’s there for the whole year; although you have to pay $500 up front, it ends up being more cost-efficient in the long run. To get started on the bond process, talk to your brokerage. Or if you’re doing it yourself, fill out this form.
Classify your goods properly.
Before shipping anything, talk to a brokerage and confirm that your goods are classified properly. All of the different components in your product will affect the way they’re classified.
Import/Export: indirect taxes and transfer pricing
With Jeff Harrison, CPA, CMA, Partner, Indirect Tax, and Melinda Nguyen-Raybould, MBA, Partner, Transfer Pricing, both with MNP LLP.
As you look at importing or exporting products, we want to bet that you probably want to keep your taxes as low as possible. To minimize your tax exposure, you’ll need to have strategies in place for Canadian federal and provincial tax compliance, foreign and/or U.S. tax planning and compliance, transfer pricing, and indirect tax planning.
To know what is taxable under the Goods and Services Tax/Harmonized Sales Tax (GST/HST), a business needs to determine the type of supply, where the supply was made and who buys the supply for each transaction. Each aspect has different components, and not understanding them could result in you overpaying, not recovering the tax paid due to your business, or being penalized for non-compliance.
When import and export transactions—purchases or sales of goods—take place between non-arm’s-length parties in two different countries, transfer pricing comes into play. The price charged between non-arm’s length parties (typically entities within the same corporate group or which share common ownership) in a purchase/sale transaction will have an impact on each entity’s profitability.
Transfer pricing rules allow each jurisdiction to tax its fair share of any profits through prescribed methodologies that govern how you, the buyer/seller, can set those prices. Having a transfer pricing strategy in place ahead of sales is key to avoiding the risk of costly transfer pricing adjustments and penalties.
We get that this kind of information can be kind of confusing and overwhelming. Jeff and Melinda explain export and import considerations on a deeper level in our expansion guide. Download the guide to get access to get expert advice on importing and exporting beyond Canadian borders.
What does market share mean?
Your market share is the percentage you control of the total market for the products and services you provide.
What does it mean to increase market share?
Businesses increase market share through innovation, building and strengthening customer relationships, hiring smart, and acquiring competitors.
How do I calculate my market share?
You can calculate your market share by measuring the percentage of sales or percentage of units your company has in the market at large.
So, if your company makes $2 million in annual sales in an industry that makes $200 million/year, then your market share is 1%. Or if you sell 20,000 units/year in an industry that sells 2 million units annually, then you have 1% of the market share.
Why is increasing market share important?
Well, the more sales you make, the more customers you have loyal to you vs. your competitor, the greater your competitive advantage. If you have a higher market share, you’re also more likely to get better prices from suppliers, since the higher volume of sales will increase your buying power.
How do I increase my market share by acquiring other businesses?
Getting more market share can mean acquiring your competition or a business that compliments your current operation to increase your customer base and market penetration. As you can imagine, that’s easier said than done. We have some top considerations for you before you take the leap.
Where can I find businesses that are for sale?
They’re often advertised online as well as in print media. Keep in mind, though, that it’s never a bad idea to connect with your network to get the word out that you’re looking to buy.
Which business should I purchase?
You won’t need to decide which business to acquire right away, but you should narrow it down to a small pool of candidates that you’d like to evaluate more. While creating this pool of candidates, keep competitors that have synergy with your own business at top of mind.
Performing due diligence
Once you’ve decided on your top candidates, you’ll need to perform due diligence—this will ultimately determine whether or not you should continue with the acquisition. You’ll want to thoroughly evaluate each of the candidates’ financial standing, assets and liabilities, goodwill and commercial potential, and the strength of its current contracts.
Maybe the business you’d like to acquire has great branding. Consider which brand is stronger and has more followers—yours or the one you’re acquiring. This analysis will help you decide whether it makes sense to rebrand or not.
Make sure you pay a fair price for the business
A good rule of thumb: if the price seems too good to be true, it probably is. At the same time, you definitely don’t want to overpay. When negotiating how much you’ll pay, keep your budget as well as the value of the business in mind.
When valuing the business, take into account its current financial standing, assets and liabilities as well as its reputation and overall performance. But you don’t have to do this alone! It’s always a good idea to think about having a proper valuation done by an objective third party to confirm that you’re paying a fair price for the business.
Accounting for assets
Once you make the purchase (yay!) , you’ll need to determine how to account for assets for income tax purposes. Basically, the price you pay for the business will be broken down into categories: a price for each asset, a price for the inventory and a price for goodwill.
If it isn’t set out this way by the vendor, you’ll have to determine the value of each asset based on its fair market value and the value of your inventory.
GST/HST on the purchase
When you purchase a business, if you “acquire all or substantially all (at least 90%) of the property that can reasonably be regarded as necessary to carry on the business,” you and the vendor can agree to sign form GST44 to avoid GST payable on the sale. However, this option is subject to a few conditions and you’ll need to make sure that it will work in your case.
You can also transfer ownership of a business through the purchase of shares. If you choose to go this route, the cost base of the assets won’t change and the sale may not be subject to GST/HST.