5 Questions to Ask Before Expanding Your Small Business
The hope and the plan for most small business owners is to grow, and with that often comes the need to expand – whether it’s hiring more people, opening a new location or building out your products or services.
But expansion isn’t cheap, it isn’t easy, and even businesses that are in a good position aren’t necessarily in the right time and place to begin expanding.
Whether you’ve begun mulling an expansion already or you’re looking for guidance for when that day finally comes, here are a few questions every small business owner should ask themselves before diving into the next stage of growth.
5 Questions to Ask Before You Expand
1. Can I afford it? You don’t necessarily need to have all the cash it would take to buy a new company or open a new location. In fact, it’s more likely than not that you’ll need to take on some form of small business debt. But even then, you need to determine whether you’ll be able to afford the debt payments (and whether you can pay a little extra off each month to whittle down the debt faster). If you crunch the numbers and find that you’ll be leveraged up to your neck, now probably isn’t the right time to expand.
2. Is demand expanding? Business owners rightly conclude that expansion is one of the keys to growth, but you have to be realistic about your situation and demand for what you provide. If you simply can’t manufacture enough of your product quick enough, or have people beating down your doors wondering about splinter offerings, you may have the requisite demand to consider an expansion. But you can’t assume that “if you build it, they will come” and open up a string of new locations when your flagship location only produces middling results.
3. Where are we expanding? If you haven’t done the market research on this front, you’re not ready. Where you expand has several levels of importance depending on what your business does. If you’re a brick-and-mortar retailer, you need to dip into demographics and determine what locations are filled with people who need what it is you sell. But even if you’re an online services company, location can determine anything such as attractiveness to new employees, taxes and other costs.
4. Do we have the personnel? Typically, any kind of expansion for any kind of business is going to involve some sort of uptick in personnel, whether it’s additional hands to work the line, new employees to work the register or even more customer service reps to tackle the increase in calls. Naturally, then, you need to consider the new hires you may have to make … but you also have to determine whether you have the kinds of people on hand who can help you execute the expansion. Do you have skilled critical-thinkers who you can delegate duties to, or even a solid lieutenant who can take over the day-to-day while you lead the expansion charge? Determine this now before jumping into a new project.
5. Can you handle it? While a large corporation can literally build whole teams dedicated to navigating an expansion, a small business typically needs every last person – first and foremost, the owner. This means even longer hours and more stressful days as you delve into decisions and considerations that are foreign to you. So take time to consider where you are in your personal life. For instance, if you have a baby on the way in a month, that doesn’t mean you can never expand … but you probably shouldn’t start next week, either. Don’t pull the trigger if you know you’re dooming yourself to a headache you’re not yet mentally prepared to live with.
Expansion questions can be difficult to answer, and your particular situation may require you to think about even more angles before diving into an expansion. That’s why we recommend that you talk to the consultants at McManamon & Co. who can help you determine whether your conditions are right, or if patience is more prudent.
Don’t blindly chase growth and end up crippling yourself in the process. Call us at 440.892.9088 or contact us online to learn more about what it takes and what you need to expand.
Tags: McManamon, small business, small business expansion | Posted in McManamon & Co., small business