Thomas Villeneuve discusses the key considerations a small business owner needs to make when you want to expand your business..
I founded Weroom, a social marketplace for flatsharing, in Paris in 2013. After a bad flatsharing experience, I wanted to launch a platform to match people to their ideal flatshare based on the kind of people living in it, not just the property itself.
Since launch we have grown rapidly, and there are many factors to consider when deciding whether or not it is the right time to expand your business and integrate into a new market. Likewise, there are a number of steps that need to be taken in order to determine whether or not your business would be able to successfully operate across various locations. When expanding into new locations, it is important to recognise that territories will have different levels of understanding and attitudes towards your business concept. Whether it be wider market research or simply identifying the existing demand, there are different methods that can assist you in understanding the different markets you plan to investigate for potential future expansion of your business.
Before we expanded into London in 2014, market research was a fundamental part of the process of better understanding the UK market and its attitude to flatsharing. We were aware that in the run up to the launch Britain was experiencing an escalating housing shortage. Our market research allowed us to reach the understanding that the UK already had an established flatsharing industry and, most importantly, UK landlords were open to the concept of renting their properties as flatshares. This meant that this was a market where our business could work, as it was relevant and met a demand.
Establishing a USP
Providing a service that meets an existing demand means that there are likely other, similar services that meet the need too. In order to stand out from competitors, it is important to establish a unique selling point or feature which differentiates you. For us, the UK was a territory where our business would face competition and it was important we established ourselves as a new proposition.
What set us apart from other flatsharing services was our focus on matching like-minded individuals and shared economy ethos. Our company facilitates a shared economy, where renters and landlords work directly in a marketplace. This, combined with our online booking platform which protects potential renters, allowed us to stand out in a crowded space. We were able to tap into the existing market and establish ourselves as a unique service in an industry that was growing exponentially. Without investigating through market research, we would not have had such a solid understanding of the attitudes towards flatsharing and the state of the rental market in the UK at that time.
Our second expansion was into Germany, where the concept of flatsharing was not as popular as it was in Britain. Nevertheless, Germany is now our second largest market in Europe, after the UK. The market research we undertook put us in the best position to enter the market and ensure German renters would be accepting of the concept of flatsharing, and of our business model of online room booking through our platform.
As well as using market research to achieve this, we also hired German staff members who had a better understanding of the market and were able to share their pre-existing knowledge and experience of living in the country. Being able to employ team members from the territory you are moving into is another way of ensuring as seamless as transition as possible. Native speakers will help avoid language barriers, and the cultural knowledge they being is invaluable.
Being an industry disruptor can work to your advantage in a competitive market, and being the first of your kind can mean seamless assimilation on an open market. A challenge when deciding to expand your business is assessing whether a new market will be open to you. In a market where your concept is not established, it is important to ask, will my business work here and how? In a case like this, be proactive, be reactive and listen to the demand in the markets that are in need of the service you can provide.
Demand in other lands
We monitored the news agenda and social media in untapped markets to investigate where and when new cities could benefit from flatsharing. Shortly after launching in Germany, we identified a strong growth of demand in the Spanish market. Where the growth was completed organic, we decided to focus on this market for our next expansion. We hired a Spanish business developer to work with us to assist us in creating a presence in the market and Spain has since been responding very well to our business, in particular our social media and digital advertising.
We also discovered the demand for flatsharing in Canada and as soon after we began publicising new listings in this new market. In this case, the concept of flatsharing was understood and something that renters in Canada both wanted and needed. We decided not to stagger the launch in this market like we did for the UK, but instead meet the demand immediately and expanded our influence in this market to own the space before the arrival of any potential competitors.
Since launching the company, I have learnt that conducting market research is a critical part of the process of expansion. It is the most reliable way of understanding how established the concept of your business is, the attitudes towards it and other established competitors. Not only will the results determine if and when you should be launching in this market, but how you should go about doing this.
Being aware of a markets attitude is also vital. We would not have been able to expand to Canada had we not identified the pre-existing demand in this particular market. Monitoring press and social media gave us an indication of renters’ attitudes towards flatsharing across various markets.
The important thing to remember is that no matter how you research your target market, make sure you do it consistently. By knowing and understanding a particular market, you will be in the best position to engage target consumers and give them cause to trust your business.
Thomas Villeneuve is founder of Weroom.