Every entrepreneur dreams of creating a successful business. After weeks, months and years of hard work, when that goal is finally accomplished, the question arises: what next? Success means something different to everyone, and you’ll know when you’ve achieved it.
The challenging part is, therefore, knowing which direction to take your business and expand on the success you already experienced. So how do you know when it’s time to take your company to the next level?
You Can’t Meet Demand
A very clear indicator that your company should grow, if not the clearest of them all, is having more business than you can handle. Make sure that you’re not simply having a great month first — this isn’t the same as sustained demand, but if you continue to be unable to meet your client’s requests, then you may be in luck.
Examining sales in order to analyze the possibility of growth shouldn’t be done during the holidays, for instance, given that higher sales are common at that time of year and may skew the numbers. Ensure that you measure the performance of your business at all levels as well, not just sales, including profit margins and consistency of cash flow.
You Have the Capital
As a business owner, you need to make sure your finances are prepared to deal with growth. Expanding costs money, so monitor all expenses and ensure that your returns on investment are looking good. This is because you may not see profits from an expansion straight away, so your funds need to keep your business going until that moment occurs.
You Have the Customer Base
Having a strong customer base is a great way to gauge whether your company is ready to grow or not, since it indicates a steady, continuous demand for your products and services. It also indicates that you’re consistently offering quality.
Sometimes your clients will be the ones to tell you to expand – if you’re getting multiple requests to open a new location or expand your services, then you know that your customers are loyal and love what you offer. Another sign is the way your clients act: do they seek you out? Do they come back? If the answer to these questions is yes, then your business might be ready for growth.
Your Infrastructure is Ready
Wanting to expand your business is not enough. It’s also necessary to ensure that your company can handle growth at an infrastructure level. Can you handle an increase in orders? Do you have enough warehouse space? Are you able to hire more employees?
Ask yourself these questions before deciding to go ahead with the expansion. This is because without systems and procedures in place, your business may become harder to manage, meaning that all processes need to be streamlined. Also, you need to be prepared to handle the extra workload. Scaling up your business may feel like the next step, but first make sure that your timing is good and you have all the tools you need to succeed.
You Have a Great Team
When it comes to business, strong leaders are a necessity. However, having the right team in place, a group of qualified workers who are also invested in the success of your company, is equally critical. The right staff will help your business handle an expansion, especially if they’re prepared and skilled enough to deal with additional work and new demands.
If your employees are ready and willing to help you achieve your vision, your chances of having a successful business growth are much higher.
You’re Meeting Goals
When you first set up your company, you establish short- and long-term goals to meet over time – without them, it would be difficult, or nearly impossible, to analyze the success of your company and the direction it’s going.
If you’re already meeting previous goals, you can prove to yourself that future goals and objectives can also be targeted and met. This gives you confidence in your company’s ability to grow. After all, if you can systematically achieve goals, you are likely to be ready to take your company to next level; especially if you’re achieving it ahead of time or are surpassing expectations.
Your Industry is Growing
You may be the No. 1 expert in your field but if there’s little to no demand for your products or services, it’s close to impossible for you to grow your business. So take a moment to look at your industry and ask yourself a few questions: is the market saturated? Do you have something to add to it? If you don’t have a lot of competition but have a large, available customer base, then the likelihood that you’ll succeed in expanding your business is higher.
Growing your business is an exciting opportunity, so it’s only natural to want to do it as soon as possible. However, an expansion takes time, effort and money, so you need to be strategic about it if you want to ensure your business has a successful growth – and can maintain it over time.
Only make the crucial business decision to expand if you’re completely prepared for it and what it entails.
Greame Donnelly is founder and director of Quality Formations; a formations agent who assist with the start-up of companies from a host of industries with a range of bespoke company structures.
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