Is now the right time to expand your business?
Erm…maybe. If you have customers and clients clamoring at your door, and if you have been scouring commercial property sites such as www.proplist.com because you barely have room to breathe in your current premises, then yes, it might be time to expand.
You might want to take on new staff, move into new office space, open a second place of business, and offer new services and products to your customers. However, you will put your business at risk if you jump headfirst into an expansion, so ask yourself these questions first.
Can I afford an expansion?
Okay, so if you are seeing a rise in your profits, then you might have the finances needed for an expansion. And we emphasize the word ‘might,’ because you need to think of the financial implications.
If you are thinking about renting or buying a larger property, you need to think about the increased overheads too. Bigger premises equate to larger utility bills, and there are other costs to consider, such as insurance costs for your building and contents. And if you are thinking about expanding into a second place of business, remember that you will also need new staff to work in the new premises. Can you afford to pay them a consistent wage? Do you have the finances to pay for the equipment they will need to manage their workloads?
You need to think carefully before relocating your business, as now might not be the right time if you aren’t financially prepared. And the same applies to new employees. Sure, you might have an increased customer base indicating growth is necessary, but your profit margin needs to contain room for the increased number of salaries you will need to consider.
To ensure you don’t land in debt, create a new financial projection, be that alone or with the help of an accountant. If it’s viable for you to expand, then great. If you’re unsure, then it might be worth holding fire for the betterment of your business.
Are my competitors expanding?
If your nearest business competitors are expanding, then that’s a good sign that now is the right time for you to follow suit. It might be that changes in your industry necessitate growth, as you might fall behind if you don’t. However, you need to look at what they are doing to expand.
So, you might want to consider the new services they are offering. Rather than replicating the exact same, you need to think about differentiating your business slightly, perhaps by filling those gaps in the marketplace that they aren’t covering.
You need to look at the locations into which they are expanding as well. It makes little sense to move into the same locale, especially if you are both targeting the same demographics. You need to buy or rent premises in an untouched part of town, providing there is enough of a customer base to potentially profit your business.
And remember that you will have new competitors to consider if you plan on expanding your range of services. Find out who they are, and then take steps to differentiate your business in some way to improve your chances of survive-ability.
To survive in the business world, there will be a time when you should grow your business. However, you need to think carefully before you do. Follow our suggestions then, and take time to consider other expansion implications that could affect your business.