10 Indicators It’s Time to Expand Your Business
If you’re like most entrepreneurs, you’re bursting with so many ideas you can’t wait to put them into practice. So when your business succeeds, your first thought is, “Woo-hoo!” and your second is, “Now it’s time to grow.”
Not so fast. Are you really ready for business expansion? Here are 10 signs that it’s time to expand your business.
- You have a loyal customer base. A strong base of repeat customers is a good sign. It indicates an ongoing demand for your products or services, as well as satisfaction with the quality of what you do or sell.
- Customers are asking you to grow. Do out-of-town visitors beg you to open a location in their cities? The owner of a women’s clothing boutique I know successfully opened a second location after noticing a steady stream of shoppers who drove from more than 50 miles away and told her they wished they had a store like hers in their neighborhood.
- Your business has been profitable for at least three years. A recent surge in profits isn’t necessarily enough to justify business expansion—it could be temporary or seasonal. However, steady profitability is a sign you’re doing something right and that your business model will work elsewhere.
- You have a strong team of employees. To handle growth, your staff needs to be ready for additional work, new demands and new challenges. In other words, they need to have their act together. You’ll need employees who can step up and take charge of a second location, a new product line or a big new account. If you’ve got these workers in place, your chances of successful business expansion improve.
- Your industry and/or market is growing. You can run the best typewriter repair shop on the planet, but this is an industry that’s definitely disappearing. If your industry is expanding, however, your business likely can, too. Similarly, if you’re catering to a growing market (such as Hispanic teenagers), your odds of successful business expansion are better.
- You have steady, positive cash flow. You can be selling record amounts of your product or service, but if you’re not getting paid on time or not managing your cash flow wisely, you won’t have the financial foundation you need to fund business expansion.
- You have more business than you can handle. Are you turning away customers or too busy to contact sales leads in a timely fashion? Are you and your employees working what seem like 24-hour days? Assuming that this isn’t the result of poor time management, but of high demand, this is a major sign there is room for business expansion.
- You see a need for related products or services. If sales of your initial product or service are strong, it could be time to add to your offerings. For example, if you make and sell a line of baby strollers, you could add different types of strollers such as jogging strollers, bike strollers or even strollers for dogs (yes, this is a thing.) If you own a hair salon, you could add related services such as waxing, massage and tanning.
- You have operational systems in place. If your business is still operating by the seat of your pants, business expansion is not yet in the cards. You’ll need documented processes to train new employees, replicate your services at other locations and ensure consistent quality.
- You’re running out of room. Sometimes, you just need to expand to a bigger location. If your employees are sitting cheek-to-cheek, you’re tripping over boxes stacked in the hallways and you have to take clients to Starbucks to have a meeting because there’s no room in your office, it’s time to seek a larger space.
Are you in one of these positions? Then it just might be time to expand. It may be time to take out a small business loan to get the working capital you need to grow.
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