How to Know It’s Time to Expand Your Small Business
June 8, 2022
June 8, 2022
In this article, youâ€™ll learn:
As a small business owner, you spent a lot of time getting your business off the ground and making it a successful venture. Part of your business journey is knowing when to expand your small business.
Typically, it’s more evident in the beginning when you should expand your company. But as your business gets farther along, itâ€™s not always as obvious when a business expansion is a good idea.
So what are the telltale signs that reveal when you should take your business to the next level? Letâ€™s find out!
The primary benefit of expanding your small business is clear â€“ more revenue for your business!
But honestly, itâ€™s about more than that.
As a business owner, you have to be constantly thinking ahead. If youâ€™re customer-centric, you want to be thinking about more and better ways to serve your customers, and how to add more customers to your portfolio. And of course, you also want to be thinking about your rivals, and how to make your company sustainable even when there is fierce competition.
Here are some advantages of expanding your business:
If you add new products or services to your business or open a new location, you’ll expand your customer base. Some businesses have only a few repeat customers, which can be detrimental if you lose some along the way. Having a diverse group of clients offers better financial protection for your business.
For example, if you own a coffee shop that serves mostly morning work commuters, you can attract new customers by adding deli items for lunch or expanding your hours later into the afternoon.
Or if you have a dry-cleaning business located on the north end of town, opening a pickup station at an underserved location at the south end can expand your customer base and bring in a new revenue stream.
New products and services will also enable you to offer more to your current customers and deepen their relationship with you, while also attracting new customers who might not have considered you before.
For instance, if you have a product or inventory-based business, buying in larger quantities or ordering more from your vendors might allow you to capitalize on volume discounts.
Most suppliers offer lower prices when you purchase higher quantities. That means you will pay less and increase your profit margin.
Or you can pass those savings on to your customers, which could bring more value and a competitive advantage to your business, likely increasing patronage and revenue for your company.
Business expansion has the potential to generate new revenue streams as you offer new products and services.
If you have relied on a primary service or product for your business, adding others can help you offset losses during downturns.
For example, if you have a landscaping business that thrives in the warmer months, adding a snow removal or salting service in the wintertime can significantly extend the amount of time your business brings in solid revenue.
Or letâ€™s say you have a product-based brick-and-mortar business. You might consider expanding your business model to an online marketplace, such as Amazon or your own eCommerce store. Doing so can help you reach new markets and offers unlimited potential.
In the end, a business expansion can bring sustained revenue to your business for the long term.
Now that you realize the benefits of expanding your business, you may want to move ahead with your expansion plans. But you want to do so when the time is right.
When your company was a new startup, it was more apparent when you needed to expand. Maybe it was just you working out of your house, and you needed to hire your first employee and open an office space. Or maybe you had a storefront and quickly realized you needed more space to fulfill the needs of your customers.
As businesses mature, expansion opportunities may become more complicated, and business owners may feel more distracted and less sure about taking on the additional risk that comes with expansion. So how do you know when itâ€™s time to take that step?
Sometimes a small business grows faster than anticipated. On one hand, thatâ€™s great news! But if your business has grown so fast that customers are waiting longer than they should for you to serve them, it might be time to expand.
For example, if you own a restaurant and constantly have customers waiting for an available table, you might consider expanding your restaurant space, adding more tables, or hiring new employees. In fact, you may have to do all of these to meet the growing customer demands of your business.
Or letâ€™s say youâ€™re an air conditioning and heating contractor and often have to put clients on two-week-long waitlists. It might be a good idea to hire another repair technician to help your business get to customers sooner.
No matter what your industry is, you need to be able to operate it comfortably for you, your employees, and your customers.
For instance, if you operate a walk-in medical clinic and have a higher patient load than your staff or your building can handle, it may be time to bring on additional staff, get a larger building, or open a new location.
Note that before expanding your business space, youâ€™ll want to evaluate the pace of growth or demand that you see in your business. Has your business only been operating at or above capacity for a short time because of a seasonal trend or temporary increased demand? Or has it been busting at the seams for some time? The latter is a sign that expansion is overdue, and itâ€™s time to move forward with your plans.
So imagine that your small business is considered second-best in the market where you operate. Only one other company has more of the market share, and itâ€™s been open much longer than you have.
The other business owner decides to retire and sell his company, right along with all of his trade secrets, inventory, and products. He wants to find someone who will keep his staff on and keep the business going uninterrupted out of loyalty to his long-time customers. The business owner is even willing to train the buyer of the business and stay on for a while to ensure a smooth transition.
Youâ€™ve looked at the metrics. Buying the business would quadruple your revenue. The only thing you need is a business loan to make it happen.
A scenario like that would be a once-in-a-lifetime opportunity for you. Itâ€™s a no-brainer that you would want to buy it without giving it a second thought.
Expanding your business makes sense when an opportunity comes knocking at your door. But sometimes, other new opportunities present themselves that arenâ€™t so cut and dry.
Either way, analyze every opportunity to decide if a business expansion is right for your business.
Nearly every business owner gets to a point where they are comfortable. Itâ€™s often after years of blood, sweat, and tears and struggling to find what works. Then comes that â€śAaahhâ€ť moment when you can breathe and relax.
That is a great milestone in every business ownerâ€™s journey. But staying stagnant for too long can also be detrimental because it usually means you stop growing your business. Consider Bilal Bhattiâ€™s story.
Today, Bilal is a successful entrepreneur who owns and operates multiple food franchises across several states. But he wasnâ€™t always happy with the speed at which his business was growing.
â€śMy business was at an idle state and not operating at the fast-growing pace I desired. I was not able to grow my business, and I needed money to help with both expansion and general working capital,â€ť said Bilal.
Thatâ€™s when he reached out to Biz2Credit to fund his business expansion plans. Now, he has a thriving franchise empire.
Perhaps Bilal realized that if youâ€™re complacent for too long, your business will never reach new heights.
Eventually, business owners need to look ahead and push forward to ensure their businessâ€™s long-term success. When youâ€™re at that point, itâ€™s probably time to consider expanding your business.
The business world is moving at a lightning-fast pace. Undoubtedly, you are great at running your own business, but new technologies and innovations are being created and discovered every day. Itâ€™s important that you keep up with the trends in your industry.
For example, the field of dentistry is continually coming up with new ways to diagnose and treat patients. Next year, there may be novel imaging equipment that can more painlessly make x-ray impressions of your patientsâ€™ bites. Or a new laser technique could come along that offers more painless drilling.
Whatever industry you serve, todayâ€™s consumer demands to be part of cutting-edge technologies or trends that can better serve them.
Sometimes, expanding ways to serve your customers better is vital for your small business to thrive and survive.
Sometimes the answer is already staring you in the face. If your customers have consistently asked for a product or service you donâ€™t yet provide, maybe itâ€™s time to consider giving them what they want.
You may already receive those kinds of inquiries when a customer visits your business. But you can also learn what customers want by reading through your businessâ€™s social media comments (or even the comments on your competitors).
As an example, if you own a bed and breakfast and get lots of questions about accommodating onsite weddings, perhaps it merits some thought.
In a case like that, maybe it would be time to reach out to a loan provider for funding to build a wedding venue on the property.
Again, whatever market you serve, take note of what your customers want and are already asking for.
If youâ€™re now considering expanding your business, there are just a few quick points to consider before making it official. After all, you want to have a clear path to success as you grow your business.
Entrepreneurship takes lots of strategic planning, but when all is said and done, itâ€™s a rewarding venture that can afford you many opportunities.
While growing your business is part of the business journey and is an exciting prospect, it is not without its challenges.
Knowing when to expand your small business requires astute planning and consideration. But leveraging business growth opportunities can be one of the wisest things you do as a small business owner.