As a small business owner, there are countless decisions that you need to make day-in and day-out to ensure your company operates at peak performance. While many of those may seem intuitive based on in-the-moment circumstances, what about those big picture decisions? If this is your first company or maybe just your first time venturing into a specific industry, those types of choices can be difficult to figure out.
One of those big decisions is deciding when it’s time for your business to grow. It might sound like something that is out of your control, but you actually make the call when you’re ready to expand your services or products on a larger scale, whether that means increasing your sales on products you have, increasing your inventory of items you offer, or entering into a new market.
While expanding is an exciting opportunity to take your business to new levels, it’s also high-risk. So, before you make any decisions about business growth, go through this checklist as it applies to your company:
Is there demand for the product or service?
Just as you would ask yourself this question when you were considering opening your business, you want to do it again (and every other time you plan on making a significant change regarding a growth factor). Identifying that yes, there is a demand for this product or service, is important because it will help you avoid investing in some aspect of your business that is unlikely to be profitable.
This can also apply to location. For example, before you hire an agent to help you find commercial property for sale in Los Angeles, you want to make sure that the market is a good fit for expanding your business.
Is your business financially stable?
Once you verify that there it’s reasonable to anticipate that there will be sufficient demand to support growing your business to a new product, service, or market, you must then look at your company’s finances. While growing your business is an opportunity to increase sales and venue, it also often requires a major investment up-front.
To determine whether your business is financially stable and ready to make a further investment, you should review your current budget. Don’t forget to factor in expected upcoming expenses. Compare your expenses against your expected revenue and capital to determine whether you’re in the right financial position to take on growth in this moment. If you’ve been considering bringing on a financial advisor, this may be an ideal time.
Keep in mind that if you have investors, they will need sound reasoning as to how and why you’re choosing to grow before they approve more funding for the venture.
Do you have the space?
For retail businesses this is especially important when it comes to inventory. You can only store and assemble so much product in a limited space, so make sure you consider that when you’re increasing the number of orders you’re taking and what items you’re going to be selling.
However, if adding a large number of employees is part of your growth plan, then you might also have to think about this in regard to office space. Keep in mind that there are safety guidelines that require you to have a certain amount of space in regard to the size of your business.
Do you have the support staff?
Don’t forget to think logistically about how many people are needed to make this expansion a reality. Whether that means people manning phones for customer service, helping customers in your store or restaurant, or even helping you assemble and package your products.
If your answer is no, this should be a priority in order to help you sustain growth as well as customer service and expectations—your reputation is everything. When you do go about hiring, be careful about bringing too many people on at once, this can put you in a precarious position if your expansion doesn’t go as planned. Instead, gradually bring on new team members in phases as you grow.
The key to successfully growing your business while minimizing pain points and risk is to take a strategic approach. By gradually scaling your business, you can grow the smart way, without recklessly jeopardizing everything you’ve worked so hard to achieve.