Thinking about expanding? Congrats. But remember, growing takes as much careful planning as launching a business does. Just because your business is profitable doesn’t mean you should expand recklessly. Here’s how to figure out if you’re ready.
You can’t meet demand.
You probably have a hunch that growth is warranted if you have more business than you can handle. But make sure to track the numbers over time because having a crazy-good month isn’t the same as sustained demand, especially if it coincides with the holidays or a special event. If you have a point-of-sale system that includes analytics (like Square does, it should be easy to track your sales by month. You want to be confident that the appetite for your product or service is real and not just a fluke before sales level out again.
You have a solid team.
When you look five years into the future, can you see yourself working with the same core staff? Are they invested in taking the business to the next level? If the answer is no, think about the holes you need to fill and plan for making some strategic hires. Check out our tips for hiring great people to make sure you’re putting the right team in place.
You’re running out of space.
If you literally have no more room, it might be a sign that you need to expand. A cramped and cranky staff — combined with strong demand — is an indicator that it’s time to secure more square footage.
You have a plan.
It’s important to have both short- and long-term goals, but you also need to map out a strategy for getting there. Do you have the right partners in place? Have you secured the necessary facilities? Is there a plan for training new employees and launching your business in a new location? Make sure you have a business plan as a roadmap for expansion.
You’re meeting goals.
It’s one thing to have a roadmap, but you also need to be reaching the milestones you’ve set for yourself. If you are, and ahead of schedule, then maybe you can speed up your plans. But if you’re consistently falling short, then take a step back and reassess. It doesn’t mean you have to scrap your plan to grow, but you might have to adjust your timeline.
You have enough cash.
This is one of the most important questions to ask. Even if you’re doing great on paper, you need to be getting paid on time and have positive cash flow to fund an expansion.
Your customers are seeking you out.
If customers are requesting your products in stores, or if they’re telling you how much they’d love to have your business in a second location, that’s an indication that you have a built-in audience that will make it possible to ramp up production or open a new shop.
Your industry is growing.
Take a look at the landscape for your industry: Is the local market saturated? Or have you just scratched the surface? If you have little competition and a large, untapped customer base, you have better odds for successful growth.
Growing your business is exciting! Just make sure you’re smart and strategic about it.