Signs You Are Ready to Grow Your Business
Each New Year brings with it thoughts about new opportunities. If you’re a business owner, you might be thinking about opportunities to grow your business in 2018. But, how do you know if you are ready to expand your business? There are a few important signs outlined below that indicate if it is the right time for you.
Long-term financial growth.
There are two important financial factors to look for when deciding if it is time to grow your business:
- If you have a regular, increase in profits (gross income minus expenditures) then your business might be ready to grow. However, you need to ensure your business is maintaining consistent, long-term growth numbers for at least 3-5 years before even considering expansion.
- Another financial indicator is you have steady, positive cash flow and your short-term financing is no longer keeping up with your business needs. For example, if you are selling inventory at record amounts with increasing profits, but your short-term financing is insufficient to fund your growth, you may be ready to expand.
New market opportunities
When assessing new market opportunities, it is important to first identify the strength of your industry. If you operate within an industry that is booming, it will be easier to grow your business. Conversely, if your industry is fading, expansion may be difficult because it might not be sustainable. However, a more stagnant industry could be an opportunity for your business to focus on expanding your product or service offerings.
Another great way to identify if your business is ready for growth 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 indicator it is time to grow to meet those new needs. Remember, if you aren’t able to keep up with your customers’ needs it may be time to pursue an expansion plan to meet their needs, including larger or more locations and additional staff. If you don’t, they may turn elsewhere.
Finally, is there a component in your supply chain you could begin producing yourself? By controlling more of your supply chain, you can reduce your costs and risks, ultimately, increasing profits. For some businesses, this is not a viable option, but for others, it can be a great way to easily begin expanding your business’s reach.
Ability to rely on others
Your business wouldn’t run well without a supportive team and it certainly won’t grow without one. If you are thinking about growing your business, first take a look at your management team. If you have a strong, stable management team that is just as excited about your business model and potential growth as you are, that is an excellent sign you will have all the right support when it comes to expansion. The same goes for your employees. Are they excited about the prospect of more business and opportunities to advance 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 are sure you have a strong team that is ready to grow with you.
Your advisors are another critical part of your growth team. You may need an accountant to confirm your financial growth over the years, a banker to provide that next line of credit to expand your company, or a real estate agent to help you select a new location. These partners are critical because they can help you avoid any pitfalls during your expansion and put you on the path to success.
Ready? Set. Go!
If you have demonstrated financial strength, see market opportunities and have a great team at your side, it may be time to put your growth plans into action. The first step for expanding your business is to create a budget. Make it as detailed as possible, including a budget and specific goals for sales, staffing and profits, among many others. Importantly, don’t just create this plan and put it in a drawer; reference it as a guide throughout your growth process.
Expanding your business can be a huge step and you need to make sure it is the right one for you and your business. Contact me for help in exploring your growth options or check out our other Small Business articles on the Education Center.