Most entrepreneurs launch a new venture with ambitions to grow the business in the future. Expanding is not always easy, and often, timing is crucial. In this guide, we’ll discuss some key factors to consider before taking the next step.
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Gauging the level of demand
One of the most important factors to consider when thinking about expanding your business is the level of demand for your products and services. If the demand has soared, and your client base is growing, this is a positive sign. If you’re struggling to shift stock, or you’re never fully booked, it may be worth waiting. Growing your business costs money, and if you move too soon when supply outweighs demand, you could lose out financially. If you are confident that the demand is high, take your time to plan the next move. If you’re opening a new store or restaurant, for example, explore different location options and look for a site that will attract your target customer. It’s a great idea to monitor sales figures and to conduct research to get ideas and suggestions from clients.
Analyzing your finances
It is no secret that most new businesses fail due to cash flow issues. Before you can grow your business, it’s essential to ensure that you have control of company debts and that you can afford to invest or borrow more. It is worth reading FISCAL’s guide on how to do a debt service coverage analysis before you think about applying for additional funding for your business. If you already have substantial debts, or you’re struggling to afford the repayments, it’s wise to avoid adding to the balance. Seek professional advice if you are unsure if now is a good time to expand or you have questions about funding streams.
Resources and staffing
Growing a business requires careful planning. Whether you’re hoping to diversify a product range or open new premises, it’s essential to ensure that you have the resources required to expand. From recruiting new members of staff to boosting stock supplies, it’s crucial to plan in advance and make sure you are ready to cope with a surge in demand before you declare your new store, cafe or salon open or offer customers new products or services. If you’re looking to increase staff numbers without adding to your wage bill on a permanent basis, you could consider more flexible options, such as offering short-term or seasonal contacts. This is an excellent idea if you run a business that experiences peaks and troughs in sales and orders, such as tour operators and agencies and stores that sell gifts for Christmas, for example.
Many entrepreneurs and business owners have ambitions to grow. Expanding a business isn’t easy and it requires diligent planning. Timing is critical, and it’s important to make sure that you make your move at the right time. Analyze and monitor demand and sales figures, use customer feedback to inform decisions, keep a close eye on your finances and make sure you are ready for the next step. You may need to hire extra team members or order more stock before accepting orders or bookings, for example.