For some reason I did not expect my business to explode out of the gate. We were so busy after the first month that we were booked out for three months in advance. I felt as though I bit off more than I could chew, and truthfully, I had. I knew my new venture would grow, but I didn’t think it would grow that fast. I realized that I underestimated my ability.
I was overworked, exhausted, not very resourceful, and in need of expanding my business. It was costly because I grew faster than I had anticipated growing and I didn’t have the things I needed to have in place in order for my company to be ready to expand and be stable at the same time.
I know many of you may be saying to yourself, “Isn’t that a good problem to have?” Only when you plan the expansion correctly, otherwise it can be dangerous. How do you know if your company is ready to expand? Can you actually plan that within your business blueprint? The answer to that is yes.
I want to be candid when I say I have made this mistake more than once. It is costly. It’s dangerous. Somehow business owners are reluctant to hire and put in place necessary help when they need it most.
Yet, many business owners wish to expand and grow their businesses. However, a move towards expansion can feel risky and owners should evaluate to see if it is the right time to expand the business.
When properly evaluated, a company can be ready for expansion, and a business can grow considerably. If the company is not ready for expansion, a move such as this has the potential to destroy the business.
So how do you know if you are ready to expand?
Here are three tips:
Consistent Three To Five Year Profit- In order to even consider extending the boundaries of your business, you have to have consistency and stability for a substantial amount of time. It is said that most businesses fail within one to five years. There is a measure of success to still being in operation after this amount of time.
Simply being in business for five years or more is not sufficient enough to gauge whether or not you are ready to expand your business. You will benefit most by evaluating how fast you’re growing. When you expand your business it requires trained staff and growth rates that benefit the expansion.
A better gauge would be the amount of time you have had a consistent profit from your business and how quickly those growth rates have happened. Now, if you have had a considerable profit from your business for a consecutive one to three years, your business may be ready for expansion sooner than you thought possible.
In my blueprint, I have areas of the business where I look at growth rates and expansion possibilities and where I’m going to grow first. Meaning, what area is going to get help first. Usually that’s sales. This is the department where the client meets my company first. If it’s going to expand anywhere, it expands there first. Then of course, delivery. I want my clients to have an exceptional experience with me. The areas that get help first are the areas that handle clients first.
Customer Retention- If your company is surviving off of a handful of loyal customers, an expansion attempt may be suicide. You have to have a substantial customer base that trusts your current products and would be willing to try any new endeavor you embark on. Retaining approximately 20% of your customer base, for at least a year, would be a good indication that you have a solid foundation to extend your business into other areas.
Also, test your expansion idea to see how effective it will be at getting new clients. It is important for your new division to help expand your current client base as well as maintain your current clients before you roll it out.
Prepared To Distribute Control- The brainchild of any business owner will always be protected and cherished. Many business owners are hands-on with every aspect of the business. However, if you expand your business you may have to distribute control of certain areas of your business to others. If you cannot release and delegate to others, then it is not the proper time for you to expand your business.
Business ventures can be exciting and they definitely are life-changing but they have to be done in their proper timing or they can become stressful and disastrous. Evaluate every single aspect of your business with honesty and you will be able to tell whether or not your company is ready for expansion.
Maybe expanding is not correct for your business. See if there is a way to expand without taking a major risk. Do a joint venture with a company and test your new product idea or expansion theory. This will help you test whether or not it is time for you to expand.
Vickie Helm is a bestselling author, business and asset strategist, and the CEO of Smart Group Firm. She has improved the success of more than a thousand companies and the lives of thousands of individuals throughout her career. You can learn more about Vickie at https://thesmartlifeclub.com or https://vickiehelm.com.