To Expand or Not to Expand?
It’s a big question. Do you expand the business and grow it to a bigger business, or do you keep it at the level you have achieved?
There are many times during the life of a business where this question will arise. The first time is when you have achieved a level of success that feels good to you. You will be making enough in the business to pay yourself a good salary and be making profits on top of that. Business at this point will usually be fairly comfortable, and you will be in control with perhaps just a small number of staff.
In the event that you do grow the business, each time you hit a goal or find that the business has plateaued you will ask the question again. So how do you decide whether to expand or not?
Take a good hard look at where you are now. Expanding for the sake of expansion is never a good idea. The expansion will take hard work and will require different skills from those that got you to where you are now.
Take a good hard look at yourself. Are you happy with your current level of success? Do you want to change your role from what it currently is to being a business owner where you are managing a team and working on the strategy of the business and doing less of the ‘doing’ in your business? Do you have the skills to do this successfully? Do you need training on different skills to ensure that expansion will be a success?
Take a good hard look at your business finances. Do you have the cash flow to fund the expansion? Or will you need to borrow money to fund it? Make sure that you prepare considered cash flow projections for the expansion to truly understand what the impact will be on the finances.
Understand that you will go backwards before you go forwards.
Expanding a business requires more of everything, more cash, more staff, more time commitment, more issues, more challenges, and if you do it right, more success and more profits.
Invariably though you will go backwards with more stresses being brought to bear by the changes required for expansion. You will need to make sure that you have systems and procedures in place for every part of the business and that they are documented. This will make it easier to onboard new staff members.
You will need to have good people skills and the ability to manage and encourage staff to do their best. You will need to be able to reprimand and counsel staff, and have great communication skills to ensure that your staff and your clients or customers understand what you are seeking to achieve with the expansion of the business.
Slow expansion versus fast expansion.
In some cases, there isn’t an option. An awesome opportunity lands in your lap and before you know it you have to be expanding fast. There is a school of thought that prescribes to the view that you should always employ four people at a time, some to do sales, some to do the work. This takes guts and a mountain of courage if you don’t have work lined up ready to keep the new team of four busy quickly.
Most businesses expand slowly. A measured plan to grow a business will ensure that the wheels don’t fall off along the way. Sure, there will be some challenges and bumps along the road, but when you expand slowly, you are able to catch the problems quickly and rectify them before significant damage is done.
Is it what you really want?
Ultimately you need to decide whether you really want to expand your business and run a larger organisation. I’ve had clients over the years who have been doing very well in their business and decide to expand. They end up working longer hours, are more stressed, struggle with staffing issues and end up making less money than they had previously. A few have then contracted their businesses back down to the pre-expansion size and returned to good profits and less stress.
Think long and hard before you expand and make sure you not only understand that there will be challenges along the way but also why you want to expand and whether your personality and capability is best suited to a larger business.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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