Is it time to grow your business?
Is it time to grow your business?
Business is going well and you’re considering expanding. Get it right and profits will soon start to swell. However, get it wrong and you risk putting a strain on the business’s cash flow, which can lead to unpleasant situations down the road. The difference between a roaring success and resounding failure often depends on timing. Here are four steps to help you decide whether now is the right time to expand your venture.
Identify areas to grow
As a business owner, identifying where and how your company should expand is critical. Here are just a few of many growth strategies to consider:
Creating new products or services for which there’s demand, either in your current market or in a new one. New products means new customers, or a better range of offering to your existing ones.
Investing in marketing. No matter how much or how little time you spend on marketing, there are options to suit all budgets and goals. These could involve initiatives like rebranding, creating a digital presence online and on social media, or by running seasonal promotions.
Updating facilities. This could be a significant change such as moving premises or it might be as small as updating your tech. If customers are not coming into your coffee shop at peak times because you’re too busy grinding the beans by hand, or the laptop you use to manage money has slowed to a snail’s pace, then it’s probably time for some form of upgrade. Better facilities means greater efficiency or increased capacity, both in turn lead to greater sales, if the market is there for it.
Bringing in new staff to help ease the load or specialise in a new area. If you’re too stacked to manage everything on a day-to-day basis then a part-time member of staff might spread some of the burden of juggling the day job. Alternatively, working with a consultant can fill a knowledge gap in your team, especially if you are looking to enter a new market you’ve never been in before. Outsourcing can provide a cost-effective way of growing your business, without the paperwork and expense involved when hiring a full time employee. A phone answering service for example, can provide a similar service to a full time receptionist, at a fraction of the cost.
Look at your business under the magnifying glass
It’s important to be honest when analysing your business for growth potential. A clear head and cautious body are essential when sniffing out new and undiscovered areas for your company to expand into.
Is there actually enough demand for you to grow? Use historical sales records to assess your sales growth. Sudden high demand may be a sign that it’s time to expand, but it could also be a temporary sales spike. If you’re experiencing a steady increase in sales then you can be more satisfied that there’s enough demand for you to start growing.
Keep a record of client feedback. Why? So you can see at a quick glance where to best invest your efforts and time. Are your customers often requesting more from you, asking for products you don’t have in stock, or services you don’t supply? Have you had to turn down business? These are all signs that the time for growth is nigh.
Are you making regular profits? If you’re generating net income, then consider being charitable to your hard working business. If you can see a way of investing a proportion of profits without leaving yourself short elsewhere, then it might be time to start looking into where to grow next.
Can you access the funds needed to grow? Borrowing can be a mighty tool for powering growth, giving you access to new opportunities you otherwise might miss out on. For example, say you came across a supplier who is selling stock at a hefty discount. It might be too much of a strain to buy all those goods on your company’s cash reserves alone. But, by using lending, you can buy the stock cheaply and then sell it on again for a profit, leading to sales you wouldn’t have had access to if you hadn't leveraged debt.
As described by smallbusiness, "there are different finance providers out there, away from the high street banks, which are able to support smaller businesses with their expansion aspirations”. Having a line of credit or a business overdraft can help bridge the gap and let you take on new customers or invest in new areas without creating a cash flow problem.
Read up on your target market
A market doesn’t have to be growing for an individual business to grow too, but it helps. That’s why it’s often a good idea to carry out a PEST analysis to see whether there’s still wriggle room to expand within your niche.
PEST stands for Political, Economic, Socio-cultural and Technological, representing a framework of environmental factors to consider when planning your next business move. By considering these external factors, you’ll better understand the market you’re in. This will help you choose whether it’s the right time to expand. For example, if consumer spending on drinking out of the home is slowing down in your area, it might not be a good time for a bar owner to open a second venue there.
Prepare for change and new challenges
An inevitable, but often underestimated, challenge of growth is the pressure it puts on you personally. A key example of how this can affect growth is delegation. When you’ve built up your business from scratch, it can sometimes be difficult to pass responsibility to others. But you can’t do everything and it’s far more productive to delegate than to rush through tasks that you once used to have time for but now no longer do. In this context, letting go nurtures the business to grow.
"Before diving in at the deep end with a new growth plan, it’s always good to take a serious sense check on how stressed you feel with your business right now."
On top of this, when the demands of running your business exceed your ability to manage them that can lead to stress. Long-term stress, in turn, may lead to mental health conditions, like depression or anxiety. Before diving in at the deep end with a new growth agenda, it’s always useful to make a serious sense check on how stressed you feel with your business right now. If you’re already feeling well overworked, then it's prudent to proceed with caution when launching new plans. There's no point expanding if you become too sick to manage the business as a result.
Identify growth areas and consider your options. For some businesses, it might be time for new premises, while for others more staff or freelance consultants could be beneficial.
Then think about your other commitments in life and ask yourself if you can give your expanding business the time it will need. If not, it may be wise to scale down your grand plans for the moment.
Finally, remember that growth isn’t just about increasing sales. Maintaining and improving profitability can be just as important.
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