Have you ever wondered whether or not you should expand your business? It’s a big decision and one with a range of financial and logistical considerations and potential consequences. Any business that has multiple offices or branches is going to require a significant investment into everything from technology to human capital.
However, you can’t be afraid to expand if the time is right, and the following are some of the signs that may indicate you’re ready for expansion, or you should at least consider it.
You Trust Your Team and Their Abilities
There are a lot of factors that go into a successful business, but one of the most difficult to achieve and sustain is often a strong team.
When you have a strong team, it can help you weather a lot of storms and potential growing pains that come with expansion.
Expansion can be stressful for a business as a whole, but when there’s a team of people who are passionate, energized, and reliable it can go a long way in alleviating that stress. If you are thinking about expansion, you want to consider who you can see still being on your team in three to five years, and potentially also who might not make the cut.
You need to be looking at your team in terms of how much they can inspire, manage, and lead others as well and also their potential to grow with your business.
You Have Efficient, Effective Processes
Processes are so important to any successful business. They are foundational, and without these processes in place, you are undoubtedly not ready to grow.
Think about your current processes and whether or not you’re too reliant on outdated models, such as paper-driven approaches or whether there are areas of inefficiency. Are there communication gaps?
On the other hand, maybe you’ve put in the effort to automate your processes and you’ve invested in modern, scalable software that allows you to do so. Does the software you use let you get a real-time view of anything you need to see at any given moment?
Do you have metrics in place to determine your ROI in different areas of your business, and is it easy for you to keep up with those metrics? If so, maybe it’s a sign you are ready for growth and expansion.
Your Customers Are Asking For It
There is a wide range of ways customers might demand your growth and expansion.
Maybe you have a restaurant or a store, and your customers are traveling a long way to visit it. Could a second location be the right move for you?
If it feels like your customers are asking for your expansion, it could be the right time.
If you offer products or services, maybe your customers want more. Maybe they want you to roll out more offerings and that could be a case for expansion.
You’re Running Out of Space
Sometimes a good indicator that you should expand is as simple as running out of room. Of course, this will be more relevant in some businesses than others. As an example, if you own an office-based business and your employees need more space or you need more room to meet with clients, perhaps you think about a second location.
You Have Some Cash Reserves
One of the biggest reasons small businesses fail is because they run into cash flow problems. Your goal as a business owner shouldn’t just be profit generation, although that’s important too. It should also be generating and managing cash.
As you grow, your cash can quickly be eaten up by the various costs associated with expansion.
You’re going to need enough cash on the sidelines to deal with these costs confidently.
To expand, you should be profitable for several years and have the cash flow that will take you through an expansion, even if you don’t get financing.
Finally, the last sign you’re ready to expand might sound counterintuitive, but it’s not—you don’t have the skills you need. You would think that would be something to slow down the possibility of an expansion, but that’s not the case.
If you need additional skills, then that means you need to hire people who have those skills as your company grows, and that’s a good reason to take on an expansion.
Scaling a business is a challenge and a balancing act. You have to walk a fine line between increasing revenue without increasing your expenses too much, but being prepared before going into it is important.
