Small business owners fall into the trap of expanding their companies far too soon. Obviously, one of the long-term goals for your business is to turn it into a big one. You want to have more staff, be able to take on more customers, and so on.
Thus, the urge to expand is great, but it should never be rushed. Before you start investing in your business to try and grow it, you need to do these three things:
Consult with a financial expert
You might think your business is ready to expand, but what do your finances say? The money required to grow a company can be substantial, so you need to ensure that you can actually afford it. Consulting with a Chartered Professional Accountant (CPA) is an absolute necessity. They will help you analyze your money and see exactly where you stand.
Hopefully, you are in a good enough financial position to afford some extra investments. Or, the CPA can help you discover good funding options to help you with this new move. Nevertheless, there is always the possibility that your CPA says you aren’t financially ready to expand. This is good – at least you learned this now instead of after spending money.
Analyze the market
It sounds technical, but you need to conduct some market analysis to see where or how your business can expand. A lot of small businesses think the only option is to keep offering the same services, but bring on more team members so more work gets done.
Realistically, you have lots of other options. Perhaps you can start selling new products/services to capture a wider audience. If you analyze the market, you may discover gaps or opportunities that are relevant to your business. Therefore, you can slip right in and find a more effective way to grow your business.
Consider the effect on your business
You’d like to imagine that expanding your business will have a positive effect on your company. But, this isn’t always the case – especially not right away. Consider what might happen if you start pumping money and time into new ideas to make your business grow.
Will there be an impact on your customer service during this move? Will the quality of your existing products/services diminish? Take all of these different things into account to consider the potential effects an expansion will have on your organization. Once you’ve done this, you can start putting plans in action to deal with any possible issues.
At the end of the day, expanding a small business isn’t always the best idea right now. Those last two words are key: right now! It could be a smart idea in the future, but that doesn’t mean it makes sense at this current moment. Always think about the three things mentioned above BEFORE you set the wheels in motion. Come at it from a financial perspective – can you afford to invest more money right now? Consider how you might expand and what opportunities present the best outcomes for you. Finally, look inwards and think about what the expansion might do to your current business operations.
