Knowing When to Expand Your Business
Your business is doing alright. Sales are steady and you’re in the black for the second year in a row. But could the business be doing even better if you expanded it? The answer to that question could make or break your business. So it’s important to get it right. Start with these tips to help you decide whether now is the time to expand your business.
Determine if Sales Are Too Good
A healthy sales volume is a good thing if you can keep up with demand. But if customers are going elsewhere to buy, you may be missing out on additional revenue. Customers who stand in long lines or can’t make an appointment to see you for two weeks may take their business elsewhere. Another sign is receiving so many leads that you can’t follow up on a timely basis. By the time you reach them, they’ve gone elsewhere. Expanding your capacity might help you capture more of the demand you’re missing.
Determine if Sales Aren’t Good Enough
What if there isn’t enough demand for your product or service and you’re not showing any sales growth? It could be that your target market is too narrow or you’ve saturated it. You might investigate an expansion into another market. Or you could look at another product line for the current market.
Keep Your Eye on the Market
Market conditions can change rapidly. That can present you with an opportunity to gain market share if you had some more capacity. For example, a competitor may be exiting the market. Expansion might help you increase that capacity so that you could serve the competitor’s customers too.
Assess Your Access to Capital
Expansion often requires an additional investment. That means you need access to more capital—a loan, investors, grants. Each takes time to acquire and you need strong financial credentials. Some businesses establish a line of credit with a financial institution. That gives them access to funds when they need it without having to go through a long application process.
Determine if You Just Need to Work Smarter
Sometimes the answer isn’t to expand but to gain more capacity with your current resources. Can you streamline processes to be more efficient? That way you can do more with the same assets. For example, you could cross-train employees so they could fill in where needed rather than having to hire another staff member. Another consideration is to better manage expenses so you can stretch your current resources.
The decision to expand should be the result of investigating a number of factors. In addition, you’ll want a solid business plan with supporting detail about the market, the resources needed, and how you’ll use them to capture additional demand. Need help? Take a look at the resources available on the Small Business Administration’s “Grow Your Business” web page.