Many small business owners start out with the “slow and steady” approach to growth. After all, they want to make sure that they master their processes with their existing clients before getting any bigger. But most of the time, entrepreneurs don’t get the luxury of predictable, slow growth: they’re either in crisis mode from day one, or experience a level of success they didn’t imagine before they started their business.
An example of this is Sassy and Brian Henry’s cheese business in South Carolina. The couple believed that their business would grow slowly. After all, they hadn’t reinvented the cheese-wheel. But it turned out that their specialty brand was just what the local market wanted, and before long, they were inundated with orders. To cope with the growth, they teamed up with another local cheese player, using their facilities to meet orders in return for some of the profits.
What their experience shows is that companies need to be prepared for rapid expansion. Growth at the cheese business was about eight times what the owners had predicted. But taking risks early on meant that they couple could afford to go all out, meeting orders from wherever they came from, even from large chains of restaurants.
Here are some signs that it might be time for your business to expand.
You’re Consistently Meeting Your Goals
Brian and Sassy’s cheese business was a success almost from the get-go. Within months, they were achieving and consistently exceeding their targets, bringing in more revenue and generating more profit than they thought was possible. Businesses which miss their targets could often need to improve their processes before they can really think about spending more money, but those already hitting their objectives – especially if these objectives are ostensibly difficult to achieve – are ripe for expansion.
Meeting goals in itself can really help a company to expand. Having a target figure displayed prominently on the wall can add motivation every day and bring a team together. Entrepreneur James Fisher did just this when trying to grow his travel planning site, challenging his team to capture 500,000 unique users per month. According to him, this challenge helped to bring cohesion and unity to his team, and it took just 12 months to reach the target.
You Have The Means
Business expansion relies on two crucial factors: timing and resources. Not only does a company have to invest in anticipation for an expansion in customer demand, but it also has to have the resources to carry itself over in the interim.
Typically, expansions cause a big deficit in cash flow. And with the average return on capital expenditure taking about four months, businesses need something to bridge the gap. Get loan information for your company to see whether you’re able to finance an expansion. If creditors like your business plan, you’ll be able to cover any short term deficit while making greater profits in the long term.
You Love The Entrepreneurial Lifestyle
Some people work just to make a living. But for others, it’s a vocation, especially entrepreneurs. For them, there isn’t such a thing as work/life balance: work is life.
If your business fits nicely into your lifestyle, it might be time to take on more work. Expansions can have long term repercussions on the normal rhythm of business, and this can lead to long days in the office and working at weekends. But if your personal life can absorb that kind of commitment, then why not?
Business author Troy Hazard, says that people who want to expand their businesses need to be prepared for it personally. Although you might have your processes nailed at your present scale, growing can introduce new pains you never imagined. In many small businesses, owners are the managers. Often, they are the only people with the expertise to manage and run the business effectively. Thus, when expanding to a new location, for example, owners have to be prepared to “double up” – training any new staff to work autonomously in the short term. Having to be in two places at once can really take its toll on your personal life.
Customers Are Coming To You
Most companies, especially startups, have to go out looking for customers. In fact, estimates suggest that looking for clients takes up about 50 percent of founder and CEO time at new companies.
However, for some businesses, finding customers isn’t a problem: they’re coming out of their own free will. Having customers come to you and not the other way around is a strong signal that your company is ripe for growth. It shows that you’ve got a brand that can be trusted or a product that people can’t find elsewhere, and they want it.
Take Brian and Sassy’s cheese company, for instance. Rather than approaching big retailers, big retailers came to them, asking if they could stock their products. First, it was Costco, and then after than Kroger and others. It was evident to the couple that if they were going to expand, now was the time to do it.
Every additional client for a business is a catalyst for growth. For B2B clients, in particular, having prestige companies as customers can boost their own brands, even in the cheese business. Now the company has its specialty cheese in more than 5,000 retail outlets across the US.
Your Team Is Ready
Many businesses are fighting a constant battle against employee churn. The moment somebody gains mastery of a particular role, they leave, forcing the company to engage in the whole process all over again.
But some companies have great cultures which keep people closely knit over the long term. Identifying whether your firm has the right culture, skill set and staff to go to the next level is an important consideration for expansion. You want to be confident that if you do start ramping up client numbers, that your team can handle it. Thus, you need to make sure that you have great leaders who can challenge their teams and make sure that they are ready to offer customers an incredible service.