As a small business owner, deciding to expand is an exciting prospect. A successful expansion of your business can improve profit margins, create a competitive advantage, and create more jobs in your community. As exciting as it is, expanding your small business also comes with its challenges.
If you’re not preparing for these potential pitfalls, it could cost you your business. Here are five simple mistakes that many small business owners make when expanding. Avoid these pitfalls to set yourself on the path toward a successful and a lucrative expansion.
Losing sight of your customers’ needs
One of the biggest mistakes small businesses make when trying to expand is failing to understand their customers and what their customers want. As you’re planning your expansion, make sure you’re talking to your customers to understand their needs.
If you’re going to be expanding into a new market, or offering new products, don’t accidentally alienate your loyal customers for the sake of growth. Communication is key to ensure you have the support of your current customers as you expand your business. Give them behind-the-scenes updates about your plans, ask them for their feedback, and show your appreciation for their loyalty, as well as their contribution to the conversation.
Expanding without a proper action plan
When you were first starting out as a small business owner, you needed a business plan. So, when it’s time to expand, you need a similar action plan to guide you and your team. The action plan should outline hiring practices, contingencies if you’re growing into a new market, and crisis management.
Lacking sufficient cash flow
If you’ve already got a stable cash flow for your business, it may be easy to overlook potential expenses that come along with the small business expansion. Are you opening a new location? Working with a new vendor? Spending extra money on advertising? All of these expenses and more can create stress on your already established business capital.
About 82% of small businesses fail due to poor cash flow management. One way to avoid struggling as you’re expanding your business is to have an established line of credit you can pull from if you need it.
Neglecting your current employees
Your core employees have been a driving factor in the success of your business, and they’ll be critical as you expand. While you’re looking forward to bringing on new employees to the team, don’t forget to check in with the needs of your current employees. A group of strong, loyal, and well-trained employees will help keep the business running as you’re focused on growth.
One way to make sure your employees feel secure in their jobs is to create an organizational chart for your small business. An organizational chart helps establish the chain of command and responsibility within your company, as well as a clear roadmap for growth for your employees as you begin hiring for expansion. Another way to include your current employees is by giving them a stake in the expansion. A great way to do this? Promote a current employee to manage the new location and help hire new employees
Failing to follow industry news and trends
Is this the right time for you to expand? If you’re going into a new market, are there external factors (taxes, business incentives, etc.) that could influence your decision? Especially in our hyperconnected world, the market moves pretty fast. If you’re not staying on top of changes impacting your industry, one wrong misstep due to incorrect timing could create major headaches for your small business.
Preparing for curveballs by dedicating the right resources to your expansion plan can keep you from failing when your small business should be thriving. Keeping tabs on your customers’ evolving needs, establishing a proper plan of action, preparing for potential cash flow challenges, meeting the needs of your loyal employees, and staying up-to-speed on industry trends will help you sidestep the most common expansion pitfalls.