When you start a business, it’s natural to dream about how far your big idea could grow. And when your business starts to grow and generate profit, expansion is frequently what comes to mind.
For a lucrative company, most people think it is advisable to expand. But, is it? Not always — and certainly not in the same way as other companies have. Sometimes, when a company expands too quickly or too early without being ready for it, the strategy causes a lot of damage, even to the point of failure of a previously profitable.
Your expansion plans would benefit from being analyzed by an experienced business strategist, and here are some key telltale signs that yes, your business is ready for the next step.
1. You’ve found your Dream Team
A good team is the backbone of your expansion plans. While in the process of expansion, you will take a secondary role in the day-to-day operations your company. You, as the CEO, will have to take care of the strategic decisions, and not so much of the daily minutiae. Having a good team already in place means you can step back and take care of the business growth plans and backend strategy, knowing that the rest of the company is in good hands, and well taken care of.
2. Your company has a steadily growing and loyal customer base
Another sign that your company is ready to expand is the increasing demand for your products or services. Your business has become a well-known name, with lots of repeat customers, who are happy to keep buying from you. And to be honest, it’s getting kind of hard to keep up with the demand.
3. You’ve done a thorough analysis
It’s not enough to “feel” it’s time for your company to grow. You need to do your research. Analyze your customers and your competition. Do this before moving forward with your plans. This analysis can also help you attract potential investors because it shows you’re making a decision based on data, and not just trusting your gut. As in other stages of your business cycle, a SWOT analysis is a good tool to clearly define the growth strategy you want to follow.
4. You’ve met previous goals
By examining your original business plan, you’ll be able to tell not only if your objectives have been reached, but also the timeframe in which they were met. By showing your business can, and has met or exceeded previous goals, your investors, your employees, and even you will be more confident that the company can meet expansion objectives.
5. You’re not a “seasonal success”
If your company has been in business for a couple of years, that means your growth is not temporary, produced by a shift in the economy, or based on a novelty factor that may wear off at any minute. And, even more important, your revenue has been growing consistently regardless of the ups and downs of the economy.
6. You’re starting to struggle to keep your pace
Another element to think about is how you’re able to fulfill your customer’s expectations . Maybe you are having to turn away customers, or your employees struggle to provide a good service, because of the increase in sales. It seems you’re working around the clock just to keep up with the demand, and you even stopped looking for new clients a while ago. This is good because it shows your company is doing something right, but it also means you’re ready for the next step, because otherwise your company – and your bottom line — will start suffering.
7. Your industry or market is expanding
A company that serves a market in expansion, and that is part of a thriving industry, has high potential for successful scale-up. You must not only analyze your industry, but also your chances to adapt and evolve when necessary. The former giant of rental video, Blockbuster, serves as a sad example of a company unable to adapt to new technologies, hanging on until it disappeared from the market entirely. If you’re catering to a growing market, the odds are in your favor. The Asian and Latin American market are currently on the rise, so if your company is aiming to those markets, your expansion plans may be just the right move.
8. You have the necessary cash flow
Whether you bring new investors on board, or you fund this business endeavor yourself, you need to have cash readily available to grow your business. You’ll need to invest in additional resources, whether that be employees, raw materials, new machines, or more efficient distribution channels, and you need to be prepared to deal with some rough months before you’re able to see a return on your investment. Make sure you have a healthy balance sheet.
9. Your business has the right systems and processes in place
Your business is about to become harder to manage, and if you don’t have clear systems and procedures already in place, things may get completely out of control. Systematize everything, from the first contact of a potential client, to your collections procedure. Create a procedures manual, and make sure it’s followed throughout your company. Take advantage of legal as your silent business partner and streamline your processes.
10. You can handle the extra workload
Expansion efforts can take a toll on your health, increase your stress levels, and impact your life in general. You will have to work extra hours, be on top of everything, deal with new suppliers, clients, and distributors, solve any situations that may occur due to an increased production, and so on. This is why it’s vital for you to have an outstanding team you can lean on, before starting your expansion plans. But even having excellent collaborators, you will be the one in charge of everything. Be honest with yourself, and decide if you are able to focus your energy on such project at this moment of your life. And make sure you have a workable self-care plan that you can stick to.
Scaling up your business may be the natural course of the business life cycle, but it has to be done at the right time, and in the right way. Consider your options, analyze the most profitable and safe path, or contact a business strategist to help you analyze and assemble the best expansion strategy, and you’ll be on your way to financial and professional success.
And, sometimes it’s okay to stay small.