One common dilemma that business owners face is whether or not to expand and when is the right time to go about it. Some worry that if they expand too early, they might not be able to keep up with their clients’ demands, while others contemplate that they may no longer have any clients left if they decide not to expand since their competitors have already taken the lead. There is no hard and fast rule on when you need to expand, but there are some aspects that you need to consider to ensure that your business will succeed.
Conduct market research
To determine if your business will remain relevant once you decide to expand, you need to do market research to ensure that the demand for your products or services warrants the expansion. You may have the budget and resources to expand, but your expansion might prove to be pointless in the long run if your customers are limited. However, if you are set on expanding your business, you can check on the other areas to focus on. For example, if your company operates locally, consider braving the international markets to gain a broader range of customers.
Address the market gaps
Another alternative is to identify the market gaps or opportunities to set your business apart from your competitors. For instance, if you are a retailer operating from a brick-and-mortar store in an overly saturated retail neighborhood, you can offer incentives or promotions for your customers if they buy from your online shop. As a result, not only are you driving more traffic to your website, but you are also providing your customers the convenience of making their transactions within the comfort and safety of their homes.
Analyze your key performance indicators
Another way to check if your business is ready is to check your key performance indicators (KPIs). By assessing your KPIs, you can measure every aspect of your business and know if you are meeting your profit targets. If you effectively achieve your business goals and make enough profit, this may be the right time to expand your company. Your investors will most likely continue to support you once they learn that your business is financially healthy. On the other hand, if you fail to meet your KPI targets, it is clear that an expansion will do more harm than good to your business.
Check your cash flow
Expansion is a costly endeavor, so you need to make sure that you have a healthy cash flow. Your goal is to expand your business without compromising your profits so you need to take small and deliberate steps to avoid draining your finances. Monitor your cash flow after every phase of the expansion and forecast any cash flow gaps that might occur. Remember that you can ask your existing investors for additional funding, especially if you have satisfied your KPIs, so do not hesitate to reach out to them for assistance.
Devise an expansion plan
Once you decide to expand, you need to make sure that you already have a plan in place. You should have a concrete reason for your business expansion. Expanding your business without purpose will cause problems that can further damage your company. You need to know your objectives, how to go about it, and how long the process will take. Without these crucial details, you might end up wasting valuable resources and spend more time than you should have for the expansion.
Make sure that you have the manpower
Expanding your business will require you to get additional staff. Take the time to talk to your team and discuss with them the possibility of getting more workforce. Your existing staff needs to be prepared to take on more responsibility, so as the business owner, you should make sure that they are on the same page with you. Depending on your needs and budget, weigh the pros and cons of hiring additional staff. Keep in mind that you need to pay for their monthly salaries and other employee benefits. Alternatively, you can look for alternatives such as seeking the assistance of an outsourcing company or hiring a contract worker or freelancer to carry out some of your tasks.
Determine if you need more space
Since your business is growing, you need to decide if you need to secure a larger space for your company. For example, if your business operates from home, you can either rent a business storage unit to store some of your merchandise and free up some space in your house. If your retail business is making more sales, you might need to move to a larger store to accommodate your customers’ demands. To do that, you can either lease or purchase a property for your business. If you need assistance negotiating the terms of your contract, consider hiring an expert who is familiar with commercial real estate law to guide you throughout the negotiation process.
When expanding your business, you must take every precaution and cultivate a calculated mindset to prevent your business from collapsing.