Growth is necessary for survival. Any small business, regardless of industry or size, needs to grow if they are serious about owning their business. The thing is, it can be hard to know if it is the right time to scale your business. Just because a business’s sales were up a few quarters in a row does not mean that they are ready to grow. Growth must be approached carefully and thoughtfully. Expanding too soon, too fast, or without a plan in place can lead to disaster.
Oftentimes, business owners want to expand their business, but do not know if it is time yet. While every business will be different, there will be some telltale signs that your business can handle change. If you are not sure if your business is ready to expand, truly examine your situation. Here are some common signs that your business is ready to take the next step.
1. Your Finances Are Secure
Congratulations! One of the hardest tasks of owning a small business is complete. Getting a business off the ground is hard enough, but actually bringing money in is another story and not too many small businesses even reach this stage.
Just because your business is making money does not mean that you can rest on your laurels. Take time to truly understand your business’s financial situation. The more you know about your everyday expenses, sales numbers, and general finances, the better.
When approaching growth, a few numbers to really examine are:
- Cash Flow– Your business’s cash flow is the net amount of money, or money-equivalents, going in and out of your business every day. Any company approaching growth should have a positive cash flow, meaning that their business is making more money than they are spending and building up cash reserves.
- Profit and Loss – Understanding your business’s cash flow is a great way to get a snapshot of your business finances right now, but cash flow forecasts tend to be just that, a snapshot. Profit and Loss Budgeting accounts for your business’s past financial situations as well as more accurately predicting what the future might hold.
- Sales – This one should be the most straightforward but is still extremely important. Take a deep look at your company’s sales numbers quarter-by-quarter over the years. You may be able to find some sort of trend to help further optimize your finances!
Again, having a good financial-base should be the first step in approaching growth. Just remember that just because your business makes money, does not mean it needs to grow.
2. You’re Feeling Burnout
Not as happy to discuss as your awesome finances, but burnout does happen to companies who are doing well.
Burnout is caused by a few different factors. Usually, an employee or even all employees can feel exhausted when;
- An employee has to do multiple jobs
- Employees often have to work longer hours to account for the number of sales being made
- An employee does not have the skills or knowledge to complete a task
- The expectations placed on both yourself and on your employees are too demanding
While feeling burnt-out is not fun to go through, it can be a good sign for your business. If you or your employees are feeling burnout because you are doing too much business, that is not necessarily a bad thing. It means that your business is ready to grow its employee base.
Do be mindful that burnout still shouldn’t be ignored. Burnout can be avoided, even if your business is growing. Try to give your employees the best work-home-life balance that you can. Even though burnout can lead to positive change, it also can lead to disaster. Make sure that burnout is not a direct result of something upper management can easily change!
3. Space Is Limited
Perhaps one of the most telltale signs that your business is ready to grow is that you have run out of space. If your company is doing so well that it is hiring so many employees but has nowhere to put them, that is a good thing. However, limited space can lead to issues.
Anybody who has ever worked in a crowded office knows that it is a pain. A crowded office can lead to distractions, a lack of productivity, logistical issues, and more. Unlike burnout, an overflowing office cannot be ignored.
As your employee count grows, look for a few ways to better use the space that you are already in. Prioritize functionality and comfortability before style and taste. If you are using cubicles, consider adopting an open-concept layout instead. Open concept offices are great at promoting collaboration and communication in the workplace while also not using too much space.
While open-concept offices are great, if you have too many employees, they still won’t help mitigate the stressors of working in an overcrowded office. Your business may need to bite the bullet and open a new location.
Do be mindful that a new office will be a large business expense. Truly take the time to think about how much you should spend on a new space, and how you are going to fund this expense.
Most business owners will not have the capital on hand to purchase a whole new office. A small business expansion loan will likely be needed to make a purchase this large. If you do decide to apply for a business loan, be sure to read all of the terms, conditions, and fine print of the loan to know exactly how much your business will need to repay.
4. There Are Opportunities in Your Industry
Your business can only go as far as the industry it operates in will allow. If your business manufactures VHS tapes, it is likely it may not make it. On the other hand, if your company operates within an up and coming industry, there are reasons to believe that growth is inevitable.
To see exactly where your industry stands, we recommend that you immerse yourself even more in the industry. Seek out as much information at the field of work your business is in as possible.
Some common resources that can help you get jump-started are trade publications, your peers in the space, blogs, conferences, webinars, and classes. Immersing yourself in the industry will just advance your knowledge and expertise.
As you continue your study of the trade, be on the lookout for areas where you think that the industry can improve. Be the industry leader!
Keeping up on the latest trends will help your company identify growth opportunities for years to come.
Again, kudos to you that your business has made it to this point. Many others have tried before you, and have failed. Keep in mind that because your business is doing well does not mean you are ready to grow.
If you do decide to take your business to the next level, be sure to have an expansion plan in place. There is nothing worse than having a leader at the wheel without any directions.