6 Key Signs to Know if its Time to Grow your Business
December 21, 2017
Is your business ready to grow? You need to think ahead. Blindly expanding your business out of necessity or desire, isn't a good idea. Don't make decisions based on your recent success either. Here are the 6 things you should consider before expanding your business.
1. Do you actually need to grow?
Think this twice before jumping into the big picture. It is common of the business owner to associate success with growing and expansion, but it is actually worth it?
You should ask instead, how can I be more efficient delivering my service, in order to become more profitable. Sometimes it is just a matter of job performance rather than having large quantities of clients. First, take a look of your numbers and find ways to reduce extra cost, improve processes and gain more profit from the service you are already delivering.
2. Evaluate your Customers behaviour
A regular flow of customers shows there is a continued demand for your services, especially when you have repeating customers. They prove that your offering is satisfactory. Additionally, the recurring revenue from repeat customers helps make your business more stable. However, you should be a little cautious when you see a sudden surge in customers. Don't take that as your reason to expand your business immediately. The increase might be caused by market fluctuation. Wait, and see if the increase is consistent or temporary.
Listen to your customers, and they will tell you exactly how you need to invest. Your customers can tell you a lot about whether you’re ready to expand your small business. One way is by literally telling you to expand! If multiple customers are asking you to open a new location or expand your services, you can be sure you have demand and a loyal customer base to rely on. Another way they can indicate you’re ready for expansion is by knowing how they behave. Do customers seek you out? Do they come back time and again? These are all strong indications that your business might be ready for growth.
3. Regular Profit
Look at how much money your business is earning after you pay your bills. If your profit is regularly increasing, it might be the time to expand your business. However, don't just focus on short-term success, look for consistent profit growth. Steady profitability is a sign you’re doing something right and that your business model will work elsewhere.
If your business does have a regular income, you can invest some of your profits into your business. As you expand your business, you will need a lot of money to carry you through your expansion, which usually means unforeseen costs and investments that won’t see returns for a long time. You need to be profitable for a few years and have sufficient cash flow to carry your business through a successful expansion, whether or not you receive financing.
4. Growing Industry
You can be the best tradie in Australia, but your business success is dependent on your industry growth. Expanding your business is easier when there is a market for your services. Even if your business is in an industry without growth, you might be able to expand your business by offering new products or services.Think about offerings things that can help future-proof your business. These new products or services can help you gain the income and stability to grow further.
5. Increase workloads
When you do good work, people want you to do more. They tell their friends, and suddenly you find yourself in a position where you can no longer do good work because you have too much work. An excessive workload isn't just a sign that you should grow. It's a sign that you must grow. Trying to press ahead without expanding your staff could cause your service quality and consistency.
6. Strong Team
If your sales doubled tomorrow, most likely would not be able to handle the new demands. If you needed to hire three new people next week, would they have a training manual to guide them?, Is it in a digital platform? Even with great documented systems in place, you will have to work twice as hard at the beginning of an expansion. Make sure the transition isn’t any rougher for your or your team than it needs to be.
Without a strong management team and passionate, reliable employees, a great concept and high sales don’t necessarily spell success. 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. To handle growth, your staff need to be ready for additional work, new demands and new challenges. You’ll need employees who can step up and take charge of a second location, a new product line or a big new account. If you’ve got these workers in place, your chances of successful business expansion will improve.
In conclusion, you should only consider expanding your business after you think about these five things. You need to make sure your business is actually ready to grow. If you push your business too soon, you might not have what it takes to survive. But, if your business is ready, you can experience great growth with more income and customers.
If you’re not confident about expanding your business right now, don’t rush. Make a plan for slow growth and follow through. Build your team, your customer base, your profits, and your systems. When you’re prepared as well as excited for the challenge of expansion, you’ll enjoy the process much more.