Signs that your Business is Ready to Expand
Every business should have a plan for growth and almost every business owner dreams of building their business into something larger and potentially more profitable. However, if you make the decision to try and expand your business at the wrong time, it could be very costly. Timing a business expansion properly is important.
Here are some signs that your organization is ready to grow.
You Have Steady Customers
Obviously, paying customers are critical to any business. When you have a steady stream of paying customers, and when that stream is growing, it’s a good sign that it may be time to expand your business.
Each organization will look at this aspect differently, depending on their relationship with customers. Companies who sign customers to contacts will know it’s time to grow when they are getting more and more contracts signed. Those who sell individual goods and services will want to be on the lookout for the number of sales they’re making. Having more repeat customers or customers choosing to sign up for premium or long-term services can also be a sign. If you have more customers coming to you (instead of you having to find them) it could be a good time to expand as well.
You’ve Done the Research
Before you expand, it’s critical to research industry trends to confirm that your market is on the rise. Your organization could be doing well at the moment, but if the industry as a whole is suffering, it may not be a wise decision to expand.
If you’re considering expanding into a different market or offering a new product or service, research in these areas is critical as well. What has worked in one location or with one product or service may not work in another, so do the research before you attempt expansion.
You Have a Strong Team
Growing a business means you’ll likely need to hire new staff and delegate more responsibility to senior managers. Expansion can put a lot of stress on your people, so you’ll need to make sure you have a strong team that can handle it. Your senior staff will likely have to take on more responsibility and make more decisions than ever before, so it’s a good idea to only expand when you have faith in your team to deliver.
You’re Bringing In “Too Much” Business
If demand for your work is exceeding your capacity, and you’re almost at a point where you have more business than you can handle, this is a good sign that it may be time to expand. However, before you jump to conclusions, you’ll want to do some research to determine if this is a seasonal boost or a one-time burst, as opposed to a more sustainable boom. You don’t want to expand quickly only to find business dry up shortly after you do.
You Have the Capital
Expanding a business requires capital. When you’re growing, you’ll likely need money for new staff, new offices, additional research and development, and various other expenses. If you don’t have the cash flow or the financing secured to see you through the expansion, you could end up in trouble.
The team at Ralevic & Ralevic LLP can assist you by completing due diligence, cash flow analysis, business ownership structure reviews, strategic planning, and much more. For more information, please contact us today.