Knowing how to react to changing business circumstances is crucial. For example, being able to determine when it’s time for you to expand your business is something any business owner should know how to do. Here are five signs you need to expand your business.
You Have Solid Finances
The bottom line is an issue for many businesses. This is particularly the case for small businesses or businesses that haven’t been in operation for very long. But if your financial situation is strong — if revenue is steady from month to month, if cash flow is solid, if expenses are under control, if profits are good — then expansion may quite possibly be the logical next step.
If you’ve been meeting your financial targets relatively easily, then expansion should be possible. But be sure to examine your finances carefully. Many businesses falter by going for too much too early. Overconfidence is a killer. Assess the state of your business’ finances as coolly and rationally as possible. Expansion is rarely cheap.
Your Customers Love What You Are Doing
Your customers are almost always the best indicator of how your business is performing. Serving customers, after all, is ultimately what business is all about. If your customers want more from your company, then you should probably be offering them more. Listen carefully to the feedback your customer base is providing.
For example, if your current customer base has a higher demand for your products than you can currently meet, expansion should probably be on your horizon. In addition, a lot of satisfied customers is a good indicator that there are plenty more potential customers for you in the market. Expansion can also take the form of offering current customers additional services.
Your Industry Is Growing
Sometimes, a need to expand is specific to your individual business. But other times, it’s a matter of larger trends. If the industry your business is in is growing as a whole, then it’s likely an advantageous time for you to expand as well. The state of the larger market is one of the best signs you need to expand your business.
Plus, growth won’t last forever. Expanding your business when your industry is in a growth phase is an example of striking while the iron is hot. An expanding industry means new markets are being found. However, if you don’t move now, those potential customers will become loyal customers of someone else, and you’ll miss your opportunity.
You Have a Strong Team
No one can do everything themselves. You may trust your own abilities, but can you rely as much on your subordinates? Do you have faith in the people you employ? Are they the right people not just for their current work, but for the more difficult projects they will be faced with if you expand? Those are the sorts of questions you need to answer to determine if it’s the right time for expansion.
The reason those questions are so important is that expansion means you will have to give up some direct control over the operations of your business. That’s just fine if you have a reliable, competent, strong team. However, things can turn into a big mess if the opposite is true.
You (and Your Team) Feel the Need For a New Challenge
Business isn’t just about making money. The emotional satisfaction of accomplishing something difficult is important too. It might be easy to stay where you are in terms of your business, but is that truly what you want? Probably not. Your team will get bored without fresh challenges as well.
It’s natural to be motivated not just to rest on your laurels (no matter how successful you may be), but to do something new. Challenging yourself is when growth occurs — not just in the usual business sense of growth, but growth in the sense of personal development and self-improvement as well.
Deciding to expand a business isn’t an easy call to make. It takes care to ensure you are doing something wise. After all, there are risks to expanding. Many businesses flounder when attempting an expansion effort. However, the five signs you need to expand your business seen above are certainly strong indicators that expansion will be a good move.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.