An important decision entrepreneurs/founders have to take is when to expand their businesses. Do you scale beyond your present market or simply maintain and continue to consolidate your current market share? These are some of the challenges entrepreneurs encounter at certain points in their entrepreneurial journey.
It can indeed be a difficult decision and if you get it wrong, it can spell doom for your business. To this end, this article discusses how to know its time to expand your business.
Your customers want you to grow
If your customers keep asking you to grow, it might be time to grow. If customers are asking for more products or services and hours, it might be time to grow to meet customer demands. Hopefully, your growth will satisfy customers, which will increase sales and make up for the money you invest in expansion. For businesses with physical locations, you might want to consider opening a second business location if customers are travelling a great distance to get to you.
You have constant profits
Basically, take your business’s gross income and subtract expenditures. This will tell you how much money your business is actually earning after you pay your bills. If you have regular, increasing profits, it might be time to grow your business. Don’t just focus on short-term success. Your success and earnings might not last. Look for long-term successes and consistently growing profits. If your business does have a regular income, you can invest some of your profits into your business. As you expand your business, hopefully, your net income will grow, too.
You have too much business to handle
Too much turnover isn’t something most startups worry about, but it can become a massive issue for rapidly growing companies. If you’re working long hours or turning away customers due to bandwidth, it may be a good time to expand your business.
Your Industry Is Growing
If your industry is growing, expanding your startup will be easier. Check out your industry trends to find out if your market is on the rise. If your industry is stagnant or fading, you might not want to expand. You might lose money in the end. Your industry might not be able to support your business if it is bigger or has more locations. Even if your business is in an industry without growth, you might be able to expand your business by offering new products or services.
You have a strong team
Without a strong management team and passionate, reliable employees, a great concept and high sales don’t necessarily spell success. The expansion puts a lot of stress on your business and will require that you give up more and more direct control. Are you prepared to trust your team with more decisions, and are they ready for what you’re entrusting them with? Will they be by your side in three or five years? Consider who’s moving forward with you and who you can’t move forward without.