The thought of business expansion certainly is an exciting one. Before deciding to hop on the growth train, however, it is crucial to be sure that your company is truly ready for that journey.
With the situation in the economy finally becoming stable after the crisis of 2008, small business owners have experienced a growth in confidence, and nearly 80 percent of them have reported profits in the previous year, so we may say the confidence is well-founded. Of course, there are still some major challenges in front of the entrepreneurs striving for success, including the lack of cash flow, time management, recruiting and retaining employees, and dealing with administrative work. All of these obstacles need to be handled properly if you are expecting to expand your business.
But, are you really ready for this kind of endeavor? Here are seven signs that will tell you if you are.
You have a steady and growing customer base
A regular flow of customers shows that there is a demand for your product or service and that you and your employees are doing a good job of addressing their needs. While new customers are always good news, regular ones are the best, not only because they prove they are satisfied with the offer and treatment, but also because the recurring revenue from loyal customers contributes to the stability of your company.
You should be cautious with sudden spikes in customers and not take this as a cue to expand your business. The increase in customers could be the reason for a market fluctuation or a specific shopping season. Give it some time to see whether this is a mere phase or an actual growth.
Your customers expect growth
Have your customers asked for some new products or services lately? Do they want you to work longer hours? Have they asked about opening up new stores on other locations? If that is the case, just remember the good old mantra “The customer is always right”.
Write down everything your customers ask for and seek patterns. If more of them require the same thing more times, that should be your sign to act. Hopefully, the expansion will make them satisfied, which will reflect at your profit.
You have a stable cash flow
Lacking sufficient capital is one of the biggest pitfalls to try and avoid when growing your business, and up to eight out of ten small businesses fail because of it. Even when it seems like you are getting more business than ever if only a couple of clients defer payments until a later date, your cash flow might be jeopardized, making your company vulnerable to insufficient capitalization during the first stages of growth.
On the other hand, if your profits are regular, and increasing, it could be the time to expand your business. Don’t make this decision based on a couple of months of profit increase, though. Look for consistent growth in profit (two or three years), and if it is present for some time now, get ready to bite on a bigger piece of the market cake.
The industry trends are telling you to expand
Growth in your specific industry is your sign to start working on your expansion. Keep an eye on the industry trends to know when to jump in. For example, business dealing with construction, computer system design, virtual reality, and wellness, are bound to make a splash in 2019, and the years to come. If you are operating in one of these industries, and the other indicators are on your side, things are looking good from the growth perspective.
If your industry is fading or even stagnating, you should wait for better times to invest in growth.
You’re bringing in more business than you can handle
Have you reached the point where you can’t handle all of the business you are bringing in, with your current capacity? This is a sign that you need more employee and a new bigger office/storage/production space.
Expanding your small business will enable you to serve a growing flow of customers, and, if you play things well, you might even get more clients.
You have quality and trustworthy staff
You may have all the processes, plans, and money in place, but if you do not have employees who can handle the challenges and the pressure of business expansion, things are not going to end up well for you.
Your staff must be ready to take on more business than usual and meet new demands. For example, if the expansion includes a new location for the company, one of your employees needs to be prepared to take charge there. Quality trustworthy employees can also help you with the development of new products and recruiting new workers.
You have functional operational systems
Finally, to take on such a huge undertaking as business expansion, your company must not work based on oral agreements and your orders. All of the processes, including workplace hierarchy, new employee training, accounting, and similar, must be documented, and consistent. This will keep your business stable in the months and years to come, in spite of the turmoil which usually comes with growth.
While flexibility is sometimes a good thing, especially in creative processes, you must, at least, have a framework which will unify the processes and the operations, and make the changes easier for both you and your employees.
You should only start thinking about business expansion once you consider these seven things. If one of them is not done properly and you push your business upwards too soon, you may learn that you don’t have what it takes to swim with the sharks. However, if you’ve got everything covered and you are certain that you are ready to grow – go for it!
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