5 Signs That Tt's Time to Expand Your Small Business

5 Signs That Tt's Time to Expand Your Small Business

Things are going great for your small business. Customers are lining up outside the door and bringing friends. Perhaps you sell out of your signature product on a regular basis. It seems that you are leaving money on the table because of your limited capacity. Is it time to expand?

In the excitement and the bustle of a busy enterprise, it’s important to approach the expansion decision with caution. If the growth is well-managed, a larger (or additional) location can boost your profile and profits. However, a poorly timed and ill-informed expansion can hurt your success and sabotage your earlier efforts.

Here are five signs that your business is ready to grow in a way that’s sustainable and strategically sound.

You Have a Loyal Client Base

Loyal clients patronize your business frequently, refer friends and colleagues, and support you on social media. They are forgiving of your occasional mistake and use it as an opportunity to give you a chance to improve your offering – not a reason to look for a competing product or service. Finally, they view the relationship with your business as more than just a business transaction.

You Have Well-Documented Policies and Procedures

One of the most challenging aspects of a growing business is that in order to expand, your business must stop being an extension of yourself and become a stand-alone enterprise. Well-documented policies and procedures can help. Think about developing a manual that will be used to hire and train new employees. Define procedures and workflows to ensure consistent quality. Anything that will standardize your “secret sauce” and ensure excellence even when you aren’t physically on location will build a foundation for organic growth.

You Have a Team You Trust

Before you can open a second location or expand, you must have grown and trained a team you trust to make decisions for the business. Of course, you could simply hire a new manager for another location, but that person won’t have been steeped in your culture. Without the benefits of assimilation and multiple feedback cycles under your watchful eye, team members won’t absorb the intangible things that make your business special. If you don’t have a strong core team now, use this time to make strategic hiring decisions and invest in training before you expand.

Your Have a Strong Track Record of Performance

A new location or expansion may eventually generate higher profits, but first you must be prepared for it to be a drain on your resources. It’s best to wait until your existing enterprise has shown a profit for a number of years (two to three years of being in the black is a good place to start). You also have to show positive cash flow from your operations. Your business’s historical growth must be fueled organically, not through external funding.

Your Industry is Growing

Much demand and not enough supply is a good formula for identifying a business opportunity. Before you expand, make sure that the demand is there. Look at the demographics of your customer base, including their spending behavior. Competitor businesses opening up, as well as expansion of businesses that supply and support yours, could be indirect signs that the industry is poised for growth.

Signs That It’s Time To Expand

Small business owners must approach the expansion decision with the same care as they did the original decision to launch a business. Create a strategic plan that makes the case for expansion. Talk to your loyal customer base to gauge their excitement and support level. Hire and train the people that you will trust to make day-to-day decisions. Review your performance record, paying special attention to the operating cash flow.

Finally, check in with yourself on your energy level and passion for the enterprise. Although passion alone isn’t enough to make a great business, you will need it to pull you through the tough days. And, if you are in the midst of a significant personal change, such as a divorce, a new marriage, birth of a child, death or illness in the family, etc., you may choose to postpone the business expansion to allow yourself time and space to recover and adapt.