To expand or not to expand?
While many small businesses are struggling to keep head above water, others are considering expansion to take advantage of the opportunities that are still out there. If this is you, there are a few things to think about before going this route.
There are plenty of ways to expand a business; some take a lot more planning, research and finance than others.
Looking At Your Current Client Base
The simplest way to grow is to focus on your current customer base and adapt your business’s offerings to meet their changing needs. This could mean buying new equipment or widening your range of products or services.
Excellent customer service is becoming more crucial as today’s consumers are spoilt for choice. Providing additional support hours at the request of customers, for example, can give you a competitive edge and generate word-of-mouth recommendations.
Attracting New Clients
You can also look to expand your business to new customers by adding another branch, buying out a competitor or bring outsourced services in-house. Not only will these opportunities help position your company for continued growth.
This option will obviously take a lot more planning and careful consideration. But no matter how you look at growing, there are certain questions every business owner should ask themselves, keeping in mind that not all types of expansion will work for every business or for every industry.
Finding The Right Path
It's important that you thoroughly research what will work for you according to the resources you have available. Rule out the options you know won't work, or that you simply don’t have the time, money or desire to pursue.
Speak to local business brokers and ask for their input regarding what trends they are seeing in your industry. You can also look at competitors that have expanded to see what they did and where they succeeded or failed.
Weighing Up The Pros And Cons
Also consider the following:
Economies of scale: Will expansion result in any cost advantages for your business?
Customer base: Will expansion expose you to new customers? And will your existing customers remain loyal while you work through any growing pains?
Yourself: Will expansion bring unavoidable stress into your life that could potentially affect your ability to successfully operate the business?
Can You Afford It?
Last, but no least, is that all-important question about money. Business loans are not easy to come by. You may be forced to provide collateral, such as your home. This adds a lot of risk, because failure could mean the loss of not only your livelihood, but your home as well.
If you're considering buying another business - a competitor or a business in a related industry - consider how you will fund your expansion before taking any drastic steps. Think about whether your current business can handle the pressure.
Taking The Plunge
Once you've decided to go ahead with your growth, it's time to plan for the nitty gritty. If it is only internal growth, put together a plan for how you will allocate resources and what you will do to make your current business bigger and better.
Include your employees in the planning, so they know what's coming and can provide input into how they think it will work. After all, this does affect them in a very big way.
If you're looking to acquire a new business, judge how well you feel you can take on that process yourself. Getting in some expert advice will be necessary when it comes to legal contracts, such as an offer to purchase and so on.
Making the decision is only the start of the planning phase. Now you have to ensure that the expansion is done right and benefits everyone concerned.