Breaking even is cause for celebration for many small business owners. As the company continues to grow, many question if it is time to expand. It is never an easy decision, but there are some factors you can consider. Ultimately, you know your business and can decide the direction to take in the future.
1. High Demand for Your Services
If you are busy, you may want to expand your business to increase performance. When measuring demand, consider if requests for your services are greater than what you can handle. If you are regularly turning down jobs or booked up for months at a time, expansion can help accept new customers who you couldn’t accommodate previously.
2. Tight Organization and Strong Staff
Some companies are busy because they are inefficient. If you want to grow, you should have sound systems and reliable staff in place. Expanding without a stable organizational structure can create chaos very quickly. Growing your company means adding new staff. Hiring good people is essential because you will be less hands-on with the jobs from day to day. Your focus will be on developing new leads.
3. Overall Growth in the Industry
It is important to have a broader sense of how well the industry is performing. Your business’ success may be short-lived if there is going to be a decline in demand in the next few years. Assess whether you can recoup your investment in the next five to 10 years. If you have an influx of new competitors, it is a sign your sector is getting bigger, and you may want to expand to thrive.
4. Capital and Regular Profits
Regular profits are a sign that you are doing well enough to expand. A spike in demand may not indicate long-term demand. If you are regularly turning a profit, your long-term prospects are more stable. Also, expanding takes money. Assess whether you have the capital to fund expansion or if you are planning to take on debt, and if you can service that debt.
5. Research Backs it Up
Your expansion plans should be carefully thought out. If you want to add another location, assess whether the identical business model will work in the new place. Knowing what appeals to your current customers can help you decide how to proceed with company growth. Analyze what works in your proximity, customer service, work quality and budget. Sometimes, all it takes is a few tweaks in the model to achieve success in a new location, and it helps to anticipate these changes.
6. Gut Instinct
Although there are practical matters to consider before expanding, many business owners ultimately use instinct to make the final decision. If you have a successful operation, use your intuition to decide whether or not it is time to take the risk.
Expanding your business represents potential opportunity, but significant risk to your company’s reputation and bottom line if things go awry. Take everything into account and rely on your business savvy that has already made your company successful.