Many small businesses start strong but eventually fizzle out. Some, however, due to hardwork and out-of-the-box thinking, survive every challenge they face. They get the opportunity to grow. However, when do you know when to take the next big step forward? Here are some things that you should consider:
You Have Solid Processes in Place
Your business will not be ready for expansion if your internal operations are running smoothly and efficiently. You have figured out a system that works and you no longer have to oversee every component of your business, starting from the manufacturing of the product and logistics to customer’s service.
You also should have a contingency plan in place to make sure that your operations do not halt when one component of your business is unable to function as expected.
The goal is to make the transition as seamless as possible. You do not want to lose your current momentum just because you have to create new processes to adopt due to increased demand.
The growth of your business should be continuous.
Your Inventory is Running Out Faster Than You Can Replenish It
You are outgrowing your resources. You find that you are starting to struggle to keep your warehouse stocked. Your products are selling out quicker than you have anticipated. And it is not even the holiday season yet!
This is a great sign that, maybe, your business needs to expand ASAP. You need to hire more people to deal with the increasing workload and address the new tasks that pop out.
Expansion, in this case, is a step that you have to take in order to provide the same level of excellence to your loyal customers.
There is Consistent Demand for Your Products
Right now, people need your products to make their lives easier or better. In the future, can you say the same?
The market changes rapidly. If you are in an industry that many experts warn is starting to decline, maybe hold off expansion.
Expansion will not save your profits nor increase sales if there is less demand for your products.
You Have Loyal Customers
A business will not be able to survive any sort of change if it cannot retain the loyalty of its customers. Before you expand, look at your most recent transactions. How many are repeat customers? Although, to grow your business, you want to attract new customers, you also should strive to encourage the old ones to keep coming back.
You want customer loyalty because it helps advertise your business. They are more likely to recommend a business they know and have a positive experience with their peers. They also will also keep your business afloat even when new competitors emerge in the market.
You Have a Steady Inflow of Cash
Profit should be coming in consistently for years. Experiencing one good month should not be your reason to expand.
Look at the past three years of your operations. Is the money going into your business larger than how much you spend to keep everything running? Is the increase in profit just a temporary spike.
If you look at the chart, profitability should be going up steadily. Otherwise, maybe you should make improvements first within your operations before you think about expansion.
There are always risks associated with businesses. Expansion will not make you immune to failure. To protect your future, consider the factors mentioned above before you evolve.