Editor’s note: This article was first published in February 2012. Its opening phrase “in times of crisis” refers to the Spanish economic crisis of 2012.
In times of crisis you have to grow and look for new markets, either by diversifying your products or by moving into new geographical areas. Of course, any attempt to expand a business and make it more profitable starts with an initial investment, so the trick would be to grow without investing, or to keep the investment to a minimum.
In a previous article we suggested several ideas for forming strategic alliances between small businesses. Basically, we adapted the alliances big companies make to the world of small businesses, although in Spain it would be hard to get several shopkeepers to agree to deals of this kind. Today we look at ways to grow and reach new markets with practically no investment.
There are two best-known methods, which are therefore the most widely used. One is the internet, which is clearly a practically free way to make your business known all over the world. The other would be to franchise the business.
More and more entrepreneurs are turning to this growth model, because a franchise not only gives us a presence in other areas but also serves as financing for the company’s growth, given that the franchisee invests in our (and their) business. If you have a service or product that could succeed as a franchise, it might be worth looking into.
Collaboration between businesses
When we decide to set up in another province, the premises or office is perhaps what requires the most investment. One way to avoid spending on premises is to create a different kind of strategic alliance from the one we mentioned earlier.
See also: The most profitable business ideas
This system is used by some laser hair removal and specialist beauty treatment companies. They approach hair salons and beauty centres to use a space inside their premises. The company pays no rent for the space; in exchange, it gives the salon a commission for each treatment it carries out.
What are the advantages of this collaboration?
There are many advantages for both businesses:
- The hair salon can offer an extra service on its premises and charge for it.
- The hair salon meets other customers it would never have met if it didn’t offer this service.
- The hair salon increases its income without investing and without taking on more staff.
- The laser hair removal company has a presence in other cities without paying for premises of its own.
- The laser hair removal company has access to potential customers (the hair salon’s customers).
As we can see, both of them benefit. We could apply this system to an insurance company, specialist shops, door or window manufacturers, home décor and practically any business with enough margin to pay a commission to its “partner premises”.
Pitching this business proposal is very simple:
“I’m going to use a space in your business to sell a product that complements yours, so the collaboration will benefit us both: customers who come looking for my service will see yours, and vice versa. On top of that, I’ll give you a commission on every product I sell.” Sounds good…
Further reading
- How to spot a bad employee before you hire them
- How long does it take you to explain your business idea?
- Why new businesses fail
Featured image: MIKI Yoshihito from Sapporo City,Hokkaido., JAPAN, CC BY 2.0, via Wikimedia Commons.
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