It’s not selfish to start up your business with the view to expand after a certain period of time. However, in some cases, expanding before your business is truly ready can cause serious pain for you. The money is rolling in, the customers are lining up, your employees are happy working for you – what more does the company need?
With all things considered, expanding might seem really tempting, but the truth is, the signs that you’re ready to expand go way beyond just the cash flow and sales demands. So, the question is – how do you know if you’re really ready?
We’ve helped several businesses to expand, and so we’ve pulled together our top five signs that you’re ready to expand. If you’re eager to find out whether or not your business is ready, keep on reading!
1. You’ve got the right team in place.
One of the biggest investments you can make as a business owner is with members of the team. They’re the ones who’ll handle the fort when you’re away. They’ll take charge of the business if you’re ill, and generally keep the business ticking over.
Whilst you’re leading the company, it’s important to have a properly built-out team of people who are not only qualified, but who are truly invested in the success of the business. You want the staff who are going to lead and inspire people, and who know how to manage sales, finance, marketing, logistics and more. If you don’t have that, ask yourself if they can be taught these qualities.
But it’s not just about your internal team; you should also think about those who you outsource to. Your accountant, your business mentor, your banker – they all play a crucial role in the development of the business, and if they’re not fully supporting you, things may start to slip and your plans for expansion might not be so solidified.
2. You have the right systems in place.
As a business grows, it’s important to have processes and systems in place to help you and your team deal with spikes in volume and so on. They might be paper-based, or over-reliant on spreadsheets. You might find some processes with inefficiencies. You may even have established automated processes that allow you to scale your business.
In any case, you want to make sure that you have the right tools in place that are helping your business function. Whether it be real-time information on expenses, logistics, sales or other metrics, it’s important to check that the systems you have are solid and will be fundamental to you growing and scaling exponentially.
It’s extremely crucial to make sure your team are on board with the systems. You may have assembled a killer team, but if you have even one person who isn’t using the systems, or not using them as they’re intended, it can disrupt the flow of your business, and lead to problems later down the line.
3. Customers are lining up.
Congratulations! Your business is rolling. People are paying for you, your products or services. But it’s important to remember incoming revenue doesn’t necessarily make a functioning business. In fact, for many start-ups, it can take at least four months for them to see a return on their investments made before expanding is even achievable.
Revenue and profits are two different things. It’s important to consider whether your business has been structured in a way that it will continue to be profitable and you’re not just making a profit today that will be gone tomorrow.
4. You have the cash.
“Turnover is vanity. Profit is sanity. Cash is king.”
Lots of business owners neglect that adage, but in actual fact, a lack of cash flow can be the number one killer of a business. Some business experts have also argued that plans to expand should be influenced by a business’ ability to generate cash, not simply by the amount of profit it makes.
If you are indeed planning on expanding, you should consider the amount of cash needed, and make sure you have plenty at your fingertips to put back into your business. Higher rent, utilities, payroll inventory – it all adds up, and if you’re not confident in being able to cover those additional outlays, then your prospects for growth should be reconsidered.
5. You truly believe you can handle it.
Some business owners can lose their passion quickly. They might have started with a great idea, but somewhere along the lines, the “real work” has become too much for them and their heart and soul aren’t focused on the success of the business any more.
Sure, you might have the cash, the team, the systems all in place for expanding, but the most important thing to check is whether your head and heart are in the right place. You’ll likely face pressure and anxiety, and enormous responsibility when expanding, all whilst still managing other aspects of your life.
So, when considering expanding, ask yourself “is this for you?” If you can’t imagine yourself doing anything else with your life and you’re convinced that you will thrive, not just survive, then you may have what it takes to jump on the “expansion” bandwagon!
Talk to us about your expansion ideas
We’ve not written this blog to discourage you from expanding. Instead, we want to present you with a series of factors to consider before making what will ultimately become a life-changing decision for you and your business.
Because of that, it’s important to talk to the experts about whether or not you’re ready for expanding, because if you’re going to scale your business, you need a long-term view. That’s where we come in! We’re here to help you with your vision and help lay the foundations for improvement and success.
Contact our team about the growth of your business by visiting our website or calling us on 01223 832477.