Not too soon, not too late – learn to read the signs before growing your business.
Expanding a business can be the best and also the worst thing to happen to an enterprise. Do it too soon and you’ll be overstretched and under resourced, but leave it too late and you’ll be left behind. Knowing when to take the leap isn’t just guesswork. Here are six sure-fire ways to tell if now is the right time to expand your business.
Steady profit and cash flow
Consistent profitability is both an indication that you’re doing something right and a warning not to squander it. While a comfortable present is safer than an unknown future, a steady profit stream can suggest a healthy business model that’s robust enough to work on scale. If you’re still unsure, a stable cash flow not only provides indication that you might be ready but also offers the financial foundation required to find out.
Customers are loyal and satisfied
Customers may not always be right, but it’s worth paying attention when your customer is telling you to expand. A loyal and satisfied customer base will provide ongoing demand through repeat business and word-of-mouth recommendations. If this demand is already outstripping supply, then expanding your business is the next sensible step. But even a strong and steady growth in your customer base, along with the capacity to continue delivering the quality responsible for this growth, might mean you’re equipped to capture a larger market.
People and processes are robust
Your business might be ready to expand, but your people and processes must be ready too. Increased responsibilities and workload involved in expanding a business will mean having to lean heavier on your staff and systems. Smooth and streamlined processes and an independent, dependable team can provide the support needed to help carry your business to the next level. Better yet, robust protocols can be duplicated and dedicated employees can add unexpected input and value.
Your industry and market are growing
While focusing on the minutiae of your own business, keep one eye on the broad factors and trends affecting your industry and market. Growth in these areas can help identify opportunities for your business to grow along with it, increasing the chance of a successful expansion. At the same time, scrutinise the behaviour of your competitors for any otherwise unnoticed indications of industry and market movements.
You can identify opportunities for economies of scale
Expanding your business isn’t just about getting bigger, it’s also about getting smarter. With size can come cost advantages through volume discounts, specialisation and increased efficiency. These economies of scale can not only reduce your production costs, but can also be passed on to your soon-to-be grateful customers.
You have done your research
Even if all the other signs are saying it’s time to expand, hold off until you have a comprehensive understanding of your business, your customers, your industry and even yourself. Expansion isn’t for everyone, and expanding too much or too quickly can bring down even the best business. If you’ve done your research thoroughly and come to the conclusion that your business is ready, then that’s the strongest sign that it’s time.