There is a small dilemma that most businesses face at some point, and that is whether or not to expand. If you try to expand too soon, you will end up failing to meet the increasing demand which can, in turn, harm your reputation. However, if you decide that you’re not going to expand just yet, it could lead to your competitors moving above you and gaining the ground that you were looking at yourself.
To stop your business from collapsing, you need a sturdy foundation. There are many ways to build this. Here are 7 points to help budding business owners expand their business for added growth.
1. Assess Your Key Performance Indicators
One way you can assess whether you’re ready for expansion or not is to check out your key performance indicators. These indicators help to tell you whether you are meeting your financial commitments and whether you are making enough profit to survive.
If you think you’ll need additional investment to expand your company, then these targets will also be something investors will look at when they decide to offer you money or not. If you find these targets are not being met, then you need to think about the long-term for expansion rather than right now.
2. Cash Flow
Expansion can be expensive, so you need to know that you can afford to do this while still maintaining the profits you need to survive. There are many ways you can fund your expansion. For instance, you can ask investors for additional cash, or you can plow your own profits into it. Whichever you choose, you need to make sure that you’re taking small steps. If you don’t, then you could run the risk of overstretching yourself and finding cash flow difficult.
After each period of expansion, you need to sit back and assess the outlook to make sure that your profits are still good. After a couple of months assessing your cash flow, you can then proceed to the next level of your expansion. Remember, be the tortoise, not the hare when it comes to business growth and expansion. Too quickly, and you run the risk burning out too soon.
3. Assess Your Needs
Before you can actually begin your expansion, you need to know what you’re looking for. This is where it can be very helpful to come up with a plan of action. In this plan, you can think about how you are going to expand, how it will take shape, and what you’re looking to achieve. You also need to have a set period of time set aside for this expansion, otherwise you could find yourself spending far longer than you should. As an example, if you’re looking to expand into online sales, then you need to know where your audience is and how you can attract them to your website.
Have a customer persona so that you know who you are targeting. Also, have the steps outlined so that you know the pathway to successful expansion. If your business needs extra labor, then be sure to spend time and money in this area, for example.
With expansion should hopefully come growth, which is exactly what you want. However, this growth can sometimes cause you to have logistical issues. For example, if you’re making more sales, then you will need to have warehousing and shipping available that can accommodate this improved growth. One alternative is to visit companies such as those on this website where you can get other companies to arrange shipping and storage for you. Not only will this avoid the task having to find larger storage, but it will also mean you don’t need to hire additional staff.
Another option is to piggyback with another supplier so that they can store your products for you. This can often work well when you are considering a partnership with another company as part of your expansion plans.
5. Prepare for Additional Staff
It is likely that almost any expansion will require additional staff at some point. You need to think about this in advance, so you can make preparations for hiring additional staff and providing for their salaries. Alternatively, you could think about hiring freelance staff to take on some of the additional workloads. While this can be a good idea in many cases, you need to assess whether these types of workers will be beneficial to you in the long run. For example, although freelance workers will be a good idea for certain admin tasks or IT solutions, they may not necessarily work if you need people on site.
6. Do Your Market Research
While you may have the money to expand, you need to think about whether you have enough of the market to do so. To find this out, you need to do your market research and see if there are enough customers there to warrant an expansion. Look at your website analytics, for example, and see if you have more hits to your website than you can cope with order wise. Are you experiencing delays with your orders? Are you having to set up waiting lists for some of your products? If this is the case, then you have a good idea the expansion will work for you.
7. Marketing Adaptions
Once you’ve made this expansion, you need to think about attracting the customers to those areas of your business. If you’ve decided to expand in your horizons into the international markets, then you need to adjust your marketing to correspond with it. It means seeing where your international customers are, and how you can reach them. For online expansion, you might need to think about adding social media marketing to your strategy. These adaptations should have already been thought out during the planning stage, so you can also see how much you need to add to the marketing budget. This is also a good time to assess whether your competitors are also moving into these markets. If they are, and you may need to consider choosing different areas instead.
There are many things you need to consider when expanding your business. However, if you can plan your expansion properly and know your financial outlook is strong, then there is no reason why you can’t push ahead with the expansion plan.