5 Signs Your Business Is Ready to Grow

Taking your business to the next level is an exciting opportunity. This might include hiring more people, obtaining new technology, expanding your footprint or creating a more robust digital presence. The question is, how do you know your business is ready? Here are five signs businesses are typically ready to grow.

1. Three to five years of consistent financial growth

Make sure you are in a good place financially and have strong potential for long-term financial growth. While one year of profits shows the business is doing well, having at least three to five years of growth shows consistency and usually indicates future financial sustainability.

Other indicators are steady, positive cash flow, as well as your short-term financing no longer keeping up with business needs.

2. High demand

Having more demand for your products or services than you can supply is a sure sign your business is doing well. Although it’s a strong indicator, first determine if the high demand is temporary or if it’s sustainable for years to come. Similar to financial growth, it’s important to show multiple years of high demand with reasonable belief this volume will continue.

If you’re unsure demand will be sustained, consider more temporary options to meet your needs right now. For example, leasing technology or a workspace instead of buying, and using subcontractors or freelancers instead of hiring employees. These allow you to test future demand without making a large investment up front.

3. New market opportunities

When assessing new market opportunities, first identify the strength of your industry. Once you determine whether the industry is booming, stagnant or fading, it can help guide expansion decisions.

Another great growth indicator is to simply listen to your customers. Are they asking for more products, expanded service hours or additional locations? If they are, it can be a strong sign it’s time to grow to meet new needs.

Finally, is there a supply chain component you could produce? By controlling more, you’ll likely reduce costs, lower risks and ultimately increase profits.

4. Projections look promising

Projection calculations look different depending on the type of business and industry, but most include a sales forecast, expenses budget, cash flow statement and balance sheet to confirm there will be – and when there will be – a return on investment. Lenders and investors also often require these calculations.

5. Reliable team in place

If you have a strong, stable management team just as excited about your business model and potential growth, that is an excellent sign you will have the right support when it comes to expansion. The same goes for employees. Are they excited about the prospect of more business and opportunities to advance the company or their careers? If you can’t identify these qualities in your team members, you may want to set the growth plans to the side until you have a strong team ready to support your growth.

Remember, advisors are another crucial part of your growth team. Whether it’s an accountant, banker, equipment finance lender, or a real estate professional – these partners serve as advocates, help you avoid any pitfalls during expansion and put you on the path to success.

To learn more about next steps for your business, reach out to me.