- Why do some small businesses choose to stay local?
- Does staying local hurt your small business in the long run?
- When should you consider expanding your local small business?
Q: Should I expand my small business or should I stay local?
A: While it can be very appealing to keep your small business local, in most cases, this is sacrificing a ton of growth and profit. Staying local limits your market both in terms of geography and in terms of niche. This article explores when you should consider expanding and how far you should look to expand.
There’s something about a local small business that creates a feeling of warmth and trust in the hearts of many Americans.
It’s hard not to feel sentimental about these “hidden gem” businesses. We seem to automatically associate them with honesty, comradery, and a dedication to craftsmanship that may be missing in huge, faceless corporations.
All of these feelings are actually quite valid. Small businesses deserve to be celebrated for their uniqueness, their ingenuity, and all the wonderful products and services they bring to the world.
But the marketplace has changed.
The internet has made it possible for small businesses to sell to wide geographic areas, regardless of their size. The idea that only a big business can cover a wide market is a relic of the past.
The pandemic has only made this more apparent. Small business formation boomed during the lockdown – during a time when countless physical storefronts and offices were shuttered.
Today’s small businesses are no less honest, unique, or valuable than a typical local small business of the past. The only difference is that they’re willing to adapt to the modern market and capitalize on the incredible opportunities of today’s digital world.
If you’re a small business owner and you’re wondering whether you should expand, you’re in the right place. We’ll explore why some small businesses might want to stay local when it makes sense to expand, and the degree to which you should expand when the time is right.
- Why do some small businesses choose to stay local?
- Does staying local hurt your small business in the long run?
- When should you consider expanding your small business?
- How far should you expand?
The Appeal of Local Small Businesses
The idea of a local small business remains very appealing – both to consumers and to business owners.
Part of this has to do with the history of business. For a long time, business size and geography were directly linked.
From a purely logistical point of view, a small business wouldn’t have the necessary resources to advertise and sell in foreign markets. Being small meant being local.
As a result, many of the most redeeming qualities of small businesses (their honesty, their care for their customers and communities, their gratitude, and their optimism in the face of a challenge) are associated with being local.
Additionally, local businesses benefit from the appeal of exclusivity.
Shopping at a local business means you’re part of an exclusive group – a secret that is unknown to the rest of the world. This is especially true when you associate the small business with your local community and your feeling of “home.”
Why Do Small Businesses Stay Local?
Some small businesses stay local to capitalize on this sense of exclusivity.
A great example of this is the New Glarus Brewery in Wisconsin. The brewery produces their wildly popular Spotted Cow Beer exclusively in their home state, and won’t ship it anywhere else despite massive market opportunities.
While this may limit them in some sense, it also creates a sense of excitement around their product. People who visit Wisconsin will go out of their way to stop by and purchase large amounts of their beer to take home.
Similar marketing strategies ensure that small businesses can remain local and successful. They capitalize on the appeal of exclusivity to promote the rarity of their products, boosting sales and accelerating local growth.
But not every local small business is thinking in such strategic terms.
Some small businesses stay local because they can’t (or don’t want to) hire additional employees. They worry that expanding will lead to a ton of extra work, and they shudder at the additional budget associated with hiring marketing experts or additional store managers.
Others simply don’t know how to scale in the early stages of small business growth. In other words, they stay local because they don’t know how to engage in effective local small business development.
Does Staying Local Hurt Your Business in the Long Run?
Unfortunately, staying local is often associated with huge opportunity costs.
With tools like Google Ads, social media marketing, and AI for small businesses, expansion is both easy and affordable.
When an entrepreneur chooses not to engage in local small business expansion, they may be unknowingly sacrificing large profits.
Those missed profits could not only make you wealthier but could also help keep your business stable as it continues to serve its local market with excellent products and services.
In addition, the rise of e-commerce means that even your local market is likely turning to online retailers. You’re not just competing with locals anymore.
This means that unless you adapt, there’s a good chance you’ll lose potential customers in your local market over time. Engaging in effective local small business growth helps offset this loss and keep your business profitable.
Without expansion, your business might end up losing profits. Who knows? You may even go bankrupt. This is exactly why expansion is so important – even for businesses that don’t necessarily feel like they need to grow.
When Should You Consider Expanding?
Not every small business needs to expand, but most should at least consider the possibilities.
If your business is facing increased competition from the e-commerce world, it’s probably a good idea to consider expansion into new markets. This logic will likely hold true for most product-based small businesses.
And this truth has never been more obvious in the post-pandemic world. According to Pew Research Center, the number of self-employed workers rose sharply after the pandemic’s first wave – which means more online businesses and greater competition for the typical local small business.
With more people than ever using online advertising and e-commerce, locals are probably seeing more ads from non-local businesses. You should consider doing the same to offset the increased competition, as this is one of the best ways to engage in local small business advertising.
If you’re looking to grow your small business, it’s also a good idea to expand geographically – especially if you feel you have exhausted your local niche. A town, city, or even a whole state contains only so many potential customers.
At some point, you have to enter new geographic markets to fuel continued growth. A wider physical range means you can get your product in front of more people. More people means – at least statistically – more potential customers in your target market.
How Far Should You Expand?
If you’ve decided to expand, one of the most important factors you need to consider is logistics. The wider you can expand, the better – but only if you have the capability to do so profitably.
For most businesses, the most important logistical consideration is shipping. As any e-commerce business will tell you, it can cost a lot to ship products into foreign countries. These costs can potentially negate the increased profit you might experience by expanding into new areas.
If you’re just starting to expand for the first time, you might want to focus your efforts on the domestic market first.
As time passes and you amass more resources, you may be better positioned to tackle foreign markets. Once you create a bigger demand for your products, you can ship in bulk, thereby reducing costs.
If you already have a considerable marketing budget, foreign markets could be an immediate opton. On the other hand, you might be able to access these foreign markets if you can find a way to deliver your goods to foreign shores while maintaining decent margins.
At a certain point, you might also choose to engage in local small business hiring to expand your business and take advantage of new opportunities. You might even choose to create new lines of business and entirely different products.
Another idea is to supplement your business with a new online product or service. This can make expansion into foreign markets much more viable. Thanks to the internet, you can deliver your digital products for free, thereby eliminating the logistic hassles involved with shipping.
Ultimately, it just comes down to your unique situation and the type of business you’re running.
How to Expand Your Local Small Business
When a local small business looks to expand, one of the best ways to do so is to establish a presence in the new market. That’s where a Virtual Office from Alliance comes in.
With a Virtual Office, your business gains a physical address in your preferred city. This isn’t just a symbolic step; it’s a practical move that allows your business to establish a foothold in the target market.
Having a physical address in a new city gives you local relevance, making you more appealing to customers and clients in that area. The advantage of having a Virtual Office from Alliance in a new city extends beyond just having a local address.
It allows you to penetrate the market effectively, gaining local visibility and recognition. This presence is crucial for building trust with potential customers who often prefer dealing with local entities.
Moreover, a Virtual Office offers optional mail handling, allowing you to operate from home.
Utilizing a Virtual Office from Alliance is a strategic move for small businesses aiming to expand. It gives you a real and significant presence in a new market, offering a cost-effective and flexible solution for you to explore new opportunities.
You can engage with a broader customer base and grow faster, all while maintaining the efficiency and adaptability of operating remotely
Wrapping Up: Local Small Business
Everything Americans love about a typical local small business doesn’t just go away when it transitions to the virtual world.
If you’re running a small business and you’re thinking about expanding out of your local market, it’s almost always a good idea to do so. Expansion can help you stay profitable, bring your products to more people, and ensure your small business sticks around for the foreseeable future.
Further Reading
- How to Make Your Small Business a Large Business
- Expand to new locations
- Small Business Ideas: 10 Vital Areas to Focus on For Maximum Growth
- Bay Area entrepreneur shares five golden rules for achieving success
If you’re looking to start a small business virtually, Alliance Virtual Offices is here to help. Our virtual office plans provide you with a business address you can use to register and operate entirely online.
Whether you want to serve your local market or share your products worldwide, a virtual office gives you the tools you need to make your small business a reality.
