New Geographic Markets

Although "new geographic market" might make you think of a large local chain expanding across the country, many small businesses also locate in multiple markets. You just need a sense of what constitutes a new market.

The owner of a coffee shop located next to a commuter train station can expand into a new geographic market just by opening a shop at another stop along the line. Due to the nature of the business, a whole new crop of commuters and local residents constitutes a new geographic market. Never mind that the new shop is just minutes away.

The decision to enter a new geographic market clearly calls for the creation of a business plan. Even though many factors will remain the same, at least at first, you can't simply clone your business operation and be assured of success. You'll have to research the demographics of the new location to be assured that the target market is big enough to support your operations.

In the case of our coffee shop owner, the fact that every train stops at one station but not at another might make an otherwise suitable location unacceptable. Similarly, you may be considering hiring employees as a result of your expansion, and that too requires careful planning.

In effect, entering a new market is basically equivalent to starting a whole new business. If you thought it was worthwhile to plan when you first started out, the case for creating a business plan before entering a new market is equally compelling. If you didn't create a business plan when you started out, now is a good opportunity to see what can be gained by doing so.