If you’re thinking about expanding your business, whether to other states, locally, or perhaps even globally, congratulations as you’re definitely on the right path to success. But while it may be exciting to think about growing, it can also be nerve racking to think about expanding when you’re not ready. One one hand, if you expand too soon, you run the risk of not being able to raise enough money for the expansion, leaving you with a lot of debt you’re unable to pay off. On the other hand, if you expand too late, an opportunity may be gone and your competitors may develop first. This means they’ll have an advantage to dominate a market or create a better product.
While there’s no exact answer as to when you should expand your business (every business is different and presents its own set of unique factors), in order to avoid the mistakes that come with a too fast, too soon approach or a you snooze, you lose situation, there are numerous signs you can watch for as you consider expansion. Take a look below at some of the tell-tale ways to know your business is ready to take the next step.
Your customers want you to
If your customers keep asking you to expand, well, it might be time to grow. When customers ask for more products, services or hours, it’s a sign that they value what you offer. So, in order to continue to meet their demands, growth may be the way to go. Forbes notes that if customers are satisfied, this could lead to increased sales, which is a win for you and could make up for the money you invest in expansion. For businesses with physical locations, you might want to consider opening a second business location if customers are traveling a great distance to get to you.
You have the money
Perhaps one of the most clear signs when it comes to business expansion is that you have the finances to do so. That means enough revenue, profits and cash flow. You’ll need a lot money to carry you through the initial phase of expansion, which could mean unforeseen costs or investments. But you know what they say: In order to earn more money, you need to spend money. So, make sure that if you expand, you have sufficient cash flow to carry your business through.
You have too much business
This is kind of a good problem to have as it means you’re meeting revenue, reaching goals and building a customer base. However, it starts to become an issue when your inventory is running out faster or there are new tasks that need to be taken care of and there’s no one to do them. If you’re struggling to meet demand or maintain the level of quality you had when you first started, it may be time to expand. But, before you take the leap, make sure to track the numbers, because having a crazy-good month isn’t the same as prolonged demand. First and foremost, you need to be confident that if you expand, customers will continue to want to pick up what you’re putting down.
Space is tight
No matter where you’re working, you need to have enough room to function comfortably. Sometimes you know you need to expand because you literally have no more room. If people are tripping over themselves in restaurants or your employees are piled on top of each other, then you may need to expand. But before you buy another location or renovate, make sure you anticipate the future of your business. You wouldn’t want to get a space or create a new one that’s too big or too small, so in order to avoid the same issue in five years, see what demands will look like down the road.
You have a great team to back you up
Without a solid team, the magic can’t happen. After all, they are part of the reason you got to where you are and if you feel confident in their abilities to make decisions and watch over things in the initial expansion phase, then it may be time to grow. If not, consider holding off. But know that when you do make the choice to take the leap, do it with a group of people you trust and that you see yourself working with for the long haul.
This article was created by BlogHer for LegalZoom.