Growth happens differently for every business. While most businesses find themselves growing naturally by producing quality goods/services that satisfy their customers, some may expand because they want to reach new markets or obtain more funding.
Like starting a business, it is important to have a plan for expanding your business. When and how you grow should form part of your business strategy - it is important to have the right people, skills and resources to support your new business growth. Take a slow, steady and incremental approach to expansion. Start with a strong foundation to build your business upon, undertake sound planning and set realistic goals.
Here are some key points to consider before expanding your business. The list is not meant to be comprehensive and only serves as a reference.
- Where will your growth come from?
Do your sources for growth (e.g. new market, new product, etc.) support your business strengths and opportunities? You should assess the pros and cons of each source, its cost to the business in terms of time and money, and if there is a ready customer-base for it.
- Will you reap economies of scale from expansion?
As the scale of your output increases, you should be able to enjoy cost advantages as the average cost per unit falls. If costs do rise, be sure that it can be covered by realistic projections of your profits.
Are you able to finance your expansion and sustain it?
Expansion comes at an increased cost for a period of time before profits catch up. Your cash flow has to be in good shape and must be able to tide you through even if your expansion plans fail.
Will your business be affected by the expansion?
Are your employees, processes and resources ready to take on more sales? Expansion involves additional risk and pressure, and it should not come at the cost of your existing business.
Are you willing to play a less hands-on role?
You should expect a change in the role you play. You may begin to work with new staff and have less time for your current operations, and have to delegate responsibilities to others. Be open to new ways of doing things especially if new partners come onboard.
Credits: Enterprise Singapore