To Expand or Not To Expand Your BusinessPosted: September 16, 2014
At a certain point in one’s business ownership, it is inevitable that you will consider whether or not business expansion is right for you. As a business advisor and leader, I see business owners contemplate this decision often, and it is not one that should be taken lightly.
There are a number of questions you must ask yourself before deciding to move ahead with growing your company, and these questions require not only thought, but research and analysis of your current positioning. I’ve detailed three important questions below to get you started on your decision-making process.
1. What type of expansion is right for you?
Are you looking for internal growth, or have you considered acquiring another business? Be mindful of the fact that what will work for one company may not work for you. Though looking to other cases for reference is important, know that your business is unique and therefore your expansion plan must be custom suited to your needs. It is easiest to rule out the expansion options that are simply not plausible, whether it be in terms of time, money, or interest to pursue, and then to go from there!
2. Will your business benefit?
Business expansion naturally means increased risk. It is important to project what expansion will do for your business financially. If there are cost advantages associated with the growth, how long will they take to be realized?
Your customer base is also a crucial factor of consideration. Will your loyal customers stick with the business through the change, and even more importantly, will new customers be there once you’ve expanded?
3. Can you afford the change?
Depending on how you want to expand your business, ensuring it is financially feasible may not be an easy task. Business loans, while available, are not always easy to secure. If your expansion does not see the success you had anticipated, you are left indebted to lenders and your livelihood is at risk. Analyze all your financing options and be sure to understand the risks associated with each one.
These questions are just the beginning when it comes to the decision-making process involved with business expansion. Have you undergone an expansion? We’d like to hear of other considerations you had to make before your decision. Please share in the comments!