Given the number of small businesses that fail every year, running a successful one is something to be proud of. If things are going well with your business, there may come a point when you start to contemplate the idea of expanding, whether in the form of offering additional products and services or opening new locations. But before you do, ask yourself these critical questions.
1. Do I have a solid customer base?
At the heart of every successful business is a strong customer base, so before you think about expanding into other areas, make sure you have enough customers interested in your current products or services. Take a look at your sales from the past year or two. Are you seeing a steady stream of customers? Repeat customers? Customer loyalty will often spell the difference between being fruitful in your expansion efforts or falling short, so that's one area you'll want to master before talking about business growth.
2. Is revenue strong and steady?
There's a financial risk involved in growing a business, so before you take it on, you'll want to make sure you're in a good place income-wise. So take a look at your current revenue and determine how much money your business is actually bringing in. If you're happy with that number, then you might move forward and expand. Otherwise, you might take a step back and think about ways to better hone your current product or service offerings to get to a healthier place financially.
3. Is my industry growing?
It's easier to expand a business when you're part of a thriving industry. But if the outlook for your business isn't particularly great, expanding is probably not a good idea. Imagine you run an independent bookstore whose sales are pretty good. The idea of opening a second location might seem appealing, but given the shift to buying books online, doing so could be a dangerous prospect that causes you to lose money.
4. Do I have enough hands on deck to make expanding feasible?
As a small business owner, you can't do it all. Before you can even think about expanding your business, consider the extent to which you currently have support from your staff members and outside professionals. Do they do an adequate job of helping you keep things running smoothly? Or do you find that you're constantly struggling to keep up with everything that needs to get done? Expanding your business will only put an additional strain on your present resources, so before you move forward, make sure you have the support system you need. And if you don't, hire people before you start taking steps to grow.
5. Do I have a business plan for expanding?
Back when you started your business, you probably sank a lot of time into developing a plan for it. If you're thinking of expanding, so too will you need a detailed roadmap outlining your goals and strategies. Specifically, you'll need to figure out the logistics behind expanding, whether that means buying additional websites or securing a space for a second physical location. You'll also need to figure out how you'll pay for those efforts. Will you take out a small business loan? Tap your existing cash reserves? Use personal savings? These are all points you'll need to hammer out before turning your dream of expanding into reality.
Expanding your business could end up being a fulfilling, lucrative proposition. Just make sure you're truly ready to take that leap so that you don't come to regret the decision later on.
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