Every new business owner hopes that their nascent creation will one day grow. After all, a business’s growth rate is one of the best indicators of its current success and viability. Expansion is only possible when you have the trifecta of having enough money to expand, the resources to manage an expansion, and the confidence in your ability to see it through smoothly.
While there is nothing wrong with being an ambitious business leader, it is possible to be too ambitious. When an overly ambitious business tries to expand before they are ready, the results can be disastrous. Not only do you risk placing your business in a worse position than when you started, the right missteps can end up sinking a business completely!
The good news is that as long as you remember a few key words of advice and you don’t rush into anything without first formulating a plan of attack, you stand a much better chance of expanding your business without suffering any major setbacks. The following are the most important considerations that should go into every business expansion decision.
What is the Current State of Your Business?
Before you can begin to even think about expanding your business in any kind of a serious way, you will first need to conduct a very thorough audit. You want to have as clear and detailed a picture of your business’s health as you can possibly obtain. As we mentioned in the introduction, if you don’t prepare and plan for expansion properly, or if circumstances conspire against you to fudge your plans, your business will inevitably suffer for it.
Building a detailed picture of your business’ health serves two important functions. First of all, it will allow you to make sure that your business is definitely healthy enough to undertake the proposed expansion. Secondly, it will help you to put some contingency plans in place (more on that later).
But how exactly should you go about collating the necessary information and statistics to make a judgement about your business’ health? Expanding is not a process that you should be rushing into, you should give yourself plenty of time to monitor your finances, make plans for improving your financial situation, and assessing your competency at hitting those targets.
A well-organised business will be keeping track of its financial health as a matter of course. However, for some businesses, their monitoring is only designed to alert them to any potential issues. For example, a business might only be looking at its gross revenue and expenses to determine profitability, only looking at detailed breakdowns when there is an issue. By contrast, a more thorough business would look at the detailed breakdown of costs every time to work out exactly where improvements should be made.
What Do You Hope To Achieve With Your Expansion?
It’s hard to convey the level of pride that a business owner feels when they are looking at their very first promising financial forecast. As soon as the success and popularity of your business becomes undeniable, it’s easy to start seeing stars. But the fatal error that many business owners make is in thinking that a healthy business should always be reinvesting its capital.
This leads to business owners constantly expanding their business, always trying to make it bigger and better. They might even be successful at this for a short while, but reality will inevitably come crashing down around them. Even the biggest corporations in the world, like Google and Apple, both of whom have diversified considerably in recent times, take their time before expanding their businesses or taking on new challenges.
If you do not have a tangible goal or objective in mind, you shouldn’t be taking the risk of an expansion. No matter how well you plan for it, expanding your business is always going to involve some degree of risk. But the less you plan for it, the greater this risk becomes. As a responsible business owner, it is up to you to reduce the risks to your business as far as possible. Setting yourself a clear and measurable goal will allow you to objectively assess the success of your venture.
Always Have Contingency Plans
The more preparation and thought you put into your business expansion, the smoother it will proceed. However, as is always the case in business, even the best plans can ultimately be scuppered by circumstances beyond our control. If this should happen, you will want to have some contingency plans in place. Without these, you are walking a tightrope throughout the expansion process.
Your contingency plans should account for all the most likely mishaps and unwelcome eventualities. Obviously, you cannot possibly prepare for everything, but you should be confident that your business will not find itself overstretched.
Think About the Scale of Your Expansion
In case you hadn’t got the message already, expanding too rapidly can easily sink a business. That is why it’s important that having made the decision to expand the business, you focus on ensuring that you undertake that expansion in the most responsible way. For example, you might decide that now is the time to add some new buildings to your business’ campus. That’s great, but are these buildings going to be providing you with office space? Or are they specialised structures for housing expensive equipment?
Both of the above scenarios are examples of ways in which a business can expand, but they are vastly different logistical challenges. The scale of the expansion you undertake will come down to the current state of your business. As a general rule, the bigger the scale upon which you undertake an expansion, the riskier the proposition.
It is crucial to remember that there is nothing wrong with a relatively small expansion. It’s better to be cautious and to take your time than to dive in and find yourself in trouble. One of the most effective ways of keeping the costs of your expansion down, regardless of scale, is to take advantage of prefabricated steel buildings.
Take a look at the range of different temporary buildings on offer from businesses like Smart Space to get an idea of just how versatile prefabricated steel buildings can be. While many people are familiar with the use of prefabricated steel structures in many different business and industrial contexts, the availability of permanent sports gyms and temporary car showrooms are a testament to the versatility of these structures.
For some businesses, expanding will mean setting up shop in new physical locations, therefore spreading the reach of your business. However, there are other businesses for whom an expansion involves adding to the existing infrastructure. It is this second type of business that can benefit the most from prefabricated steel buildings.
Whether you plan on undertaking a major expansion, or a relatively modest one, being honest with yourself about your requirements early on in the process will ensure things proceed without a hitch.
Can Your Network Help?
Whether you are a self-made entrepreneur or a career professional, you will no doubt have built up an extensive network of contacts over the course of your professional life. With the advent of the internet, most businesspeople no longer keep a Rolodex on their desk full of contact details. Instead, business networking today takes full advantage of the internet and social media.
The result is that many businesses and individuals have extensive networks of contacts that they rarely utilise as they should. The nature and the logistics of your expansion will vary according to the specific characteristics of your business. When you are planning your expansion and compiling a list of the tasks involved in undertaking it, be on the lookout for any tasks that you think someone in your network might be able to help with. If you are able to source some support in this way, you can keep costs down without sacrificing on the quality of the work.
Is it Worth it?
When you have your detailed plans for expansion in your hands, it’s time to take a step back and give yourself one last chance to back out. Don’t set anything in motion until you are 100% sure of what you will be doing, or until you have confirmed for yourself that your proposed expansion is worth the risk and investment.
Once your actual expansion is underway, it can be very difficult to extricate yourself should things not pan out as hoped. It is, therefore, essential that you do not commit to anything until you know exactly what you are committing to, and its chances of success.
Expanding your business is an exciting undertaking, but it is also a challenging one. It seems natural for most businesses to expand at a certain point. In fact, many business owners have plans to expand their businesses from their earliest days, although these plans might take some time to materialise. Once you have made the decision to expand, make sure that you focus on doing it the right way.
