My Small Business Is Ready For Expand – What Do I Do Next?
You’ve had some success with your small business. Now what? It’s time to think about growth.
Your first moves toward expansion can seem intimidating, but this shouldn’t keep you from pursuing larger business goals. You have to establish clear plans to leverage proven technology, finance, and market acumen.
An entrepreneur that establishes a foothold today can advance to running a large-scale enterprise ten years from now. The first step to achieving that scale is to start thinking about that future.
When to Expand a Business
Let’s cut to the chase. If you’re reading an article about when to “expand your business,” there’s a good chance you’re ready to take your business to the next stage in its evolution.
As you know, timing is everything. Growth will always be a risky proposition—scale too early and you could jeopardize your business. However, expand at the prime moment and you’ll position your business for major future success.
If you still have your doubts, you can look for a few telltale signs that’ll indicate it’s expansion time. You’ve probably already noticed a few of these clues (that’s why you’re here, isn’t it?), but others will require you to do some research into the state of your business. These clues will make your decision to expand—or not expand—less of a gamble and more of an informed strategic decision.
You’re Drowning in Business
This sign can manifest itself in a variety of ways across different industries: customers lining up out the door, a lack of bandwidth to accept new business, late hours at the office, depleted stock and inventory, etc..
If your business can’t meet demand, that’s a clear sign it’s time to grow. But, before you press the green light on expansion, make sure you dig a little deeper into the details. Are you just experiencing a one-off crazy-good month? Does your business follow a seasonal cycle?
Answers to questions like these can help you determine if your business is ready to expand and how. If business is booming in the summer and lulling in the winter, consider hiring temporary, freelance, or part-time help when needed. If you’ve hit a recent spike in sales, don’t rush off and purchase additional real estate or bulk up on inventory before you’ve determined there’s sustained demand.
A Golden Opportunity Arises – And You Can’t Say “No”
When the perfect opportunity presents itself, sometimes the best business decision is to seize it before it passes by, even if you don’t feel like you’re ready. Maybe a piece of expensive equipment goes on sale, an opportunity to grab a second location surfaces, or you have the chance to make the ideal hire—sometimes you just can’t (or shouldn’t) say “no.”
Be adaptable and open to change. When you find yourself in these situations, you may be forced to grow your business faster than you’re comfortable with. Rarely will the perfect opportunity arise when you’re content and ready.
You’ll need to take a step back, examine your business circumstances, and determine if expanding is worth the risk. If it’s right, get the financing you need and go after it. If it’s not, stay on your toes and keep your eyes open for future opportunities.
You’ve Built A Sufficient Cash Cushion
It’s no secret that staying on top of your budget is critical to your small business’s success, but once you have enough cash sitting in your emergency fund, it’s time to put the excess to good use: expansion.
Think of ways you could use that money to grow your business. You could expand your inventory, build your team, invest in advertising, or acquire a competitor—the opportunities keep going and going.
With any business development, you’ll go through a ramp-up period where you won’t see any return on your investment, so make sure you are conservative with your financial projections and have sufficient cash on hand to cover any unexpected situations. Don’t forget that your savings account doesn’t do your business much good (except for in times of need), so think of all the ways to get the extra cash working for you and building your business’s future.
You’re Ready (and Excited) to Delegate
For entrepreneurs, especially first-time small business owners, delegation doesn’t come easy. They’re heavily invested in the success of their business and often don’t trust others enough to handle important (and sometimes even trivial) responsibilities.
If that’s the case for your business, you’re likely not ready for expansion. However, if you’ve begun delegating and are anxious about the prospect of passing on more duties, then you may be in a good position for growth.
Your business needs to always remain in a position where it can carry on without you. If your business’s survival is dependent on you putting in the hours, weeks, and years, then it will be in a constant state of vulnerability. Growing the business in this environment often leads to burnout and eventual failure. So, before you expand, make sure you’re ready to delegate and empower others.
How to Expand a Business
Now that the “why” is squared away, the trickier aspect is the “how.” Many entrepreneurs have been stymied by the overwhelming nature of organizational change and future planning. The best strategy is to ensure you have a strong infrastructure and then plot a course of action centered around innovation and savvy investments.
Develop a Solid Technology Strategy and Infrastructure
Businesses that can deploy standardized and automated processes will find it easier to scale and expand. A technology plan positions your company with a better strategic focus and impacts its overall productivity.
Tools and processes incorporating elements of automation, artificial intelligence, and collaborative technology can empower your employees to make smarter business decisions. Cloud-based tools, in particular, help automate key insights generated from business data. For example, you might consider combining data from your finance and operations departments with an ERP system, in order to gain cross-functional insights.
Disparate areas of your business may exert a strong influence on each other and ultimately drive overall growth. Increased visibility into disparate, critical business metrics — including logistics, finance, and customer relations — will help you develop strategies and best practices that account for the health of your whole business.
Keep an Eye on Cash Flow
About 80 percent of businesses fail due to cash flow mismanagement. Don’t let your business be one of them. Your cash flow might be stable now, but what happens when you expand? You may have planned on opening up a new retail location or beefing up your advertising spend, but there are many other “extra” costs that can put significant strain on your business capital if not properly accounted for.
We recommend separating your working capital and growth capital so that daily expenses are easier to forecast and budget for. Savvy entrepreneurs often establish business lines of credit or longer-term business expansion loans to keep finances steady while they scale.
Focus on Constant Innovation
Innovation focuses on two central themes:
- What problem is my customer facing?
- How does my product or service solve that problem?
Customer priorities and desires can change like the weather. So, your company must foster a culture of innovation to remain competitive. Continuous product development and iteration is a great way to retain and attract new customers. For example, if duct tape or olive oil had only one use, imagine how much smaller their respective markets would be.
Businesses that pay attention to emerging trends can better address the needs of their customers and capture a greater market share.
Set and Communicate Goals
No growth strategy is complete without clear-cut, measurable goals. Setting achievable business goals is an art and a science. The key is to focus your energy on the factors that contribute most towards creating a lasting culture of success. Talent acquisition, expense management, and marketing are all increasingly vital to success in competitive markets.
Boosting employee retention, cutting down on overhead, or deploying a social media campaign are all tactics that can put you on the right track. Make sure to outline goals that can be measured over time. This way, you’ll have a better baseline for success, even if you fall short of your goal. As long as you’re gathering data that can inform future strategy, no failure can be considered a truly wasted effort.
Your business won’t be “small” forever. You have big plans for the future, so make sure your execution is aligned with your goals. The world’s biggest brands were once startups and small businesses, too. If you can take a look at the bigger picture and invest in tools and processes that will allow you to realize your full potential, your business may even become the next world-famous brand.