If you are looking to invest in your business for the long haul, expansion can hold some lasting benefits. However, the subject of change can bring about a multitude of questions, worry and maybe even some entrepreneurial anxiety.
Soothe the common stressors by having a necessary and important conversation with yourself. Ask the tough questions and look for logical answers before you make an official move. As with most things in business, proper planning and thoughtful considerations will serve your expansion well.
What type of expansion am I looking for?
First things first, you have to figure out what “expansion” means to you and your business. For some this will mean branching out to a new geographical location. From here other questions will arise like, “should I buy or lease?” or “will I brand the same look for my next store?”
Others might consider expanding into new markets. This is a good idea for those entrepreneurs who have had success with the products in their specific niche and can see complimentary markets that align with their customer base and company goals.
Expansion can also come in the form of new products and services. Such an expanded offering could make your business more attractive to customers when compared to your streamlined competitors.
Is the juice really worth the squeeze?
Just as you did when you started your business, mapping out a business plan for your expansion is another necessary step. It is important to determine if the initial costs and upfront efforts will at some point offer a payback (and how long that payback will take).
You must also consider the additional workload and your level of commitment this time around. Think back to when you were first starting your business; sure, you are in a better position now then you were back then…
…However late nights, working weekends and a skewed work/life balance may apply to your expansion period too. You must ask yourself, “Will the projected payback be worth the added personal and financial commitments?”
How will this expansion change my business’s current state?
Expansion can mean both hiring new employees or might even mean laying off certain departments. It is important to consider the necessary changes that will occur, as those changes will likely affect your business’s flow.
Keep in mind that your valued employees should be kept in the loop. Their support is crucial to making these changes take place as smoothly and effectively as possible.
Just as you need their support, your employees need your support too. Include them in on your plans and keep an open form of communication going pertaining to those changes that directly affect them.
How will I afford this expansion?
Cash flow will be crucial in deciding if you can withstand such an expansion. Inventory, equipment and new hires will all require some upfront costs, and your flagship business should not stand in as the fall guy.
The best situation would be if you were responding to an overwhelming demand (and therefore utilizing your business’s healthy bank account). However for most entrepreneurs, outside backing will need to take place. Be sure to study the varied options and find a fix that best fits your current needs and future wants.
Whether you opt for a bank loan, crowdsourcing or a direct private lender there are plenty of options that can back your expansion. The good news is that with an already successfully running business, you can showcase a crisp blueprint based off of your current track record.
How will I handle all of these changes?
In addition to all of the productivity and financial factors, it is also important to consider the psychological changes that take place when a business expands.
Chances are as an entrepreneur you strive to do it all. This impossible feat will be even more daunting as you grow your small business. Ask yourself if and how you will be able to handle delegating more and being slightly less involved in certain areas. Now might be a good time to consider taking on a partnership of shared responsibilities.
Another psychological factor worth considering: motivation. Surely when you first embarked on your entrepreneurial journey your motivations were running high. Will you be able to tap into that same type of energy this time around?
Be sure to stay true to the passions and creativity that initially drove you down your unique business path. Expansion can be a great thing especially in terms of financial growth, but your happiness and satisfaction levels are just as important. Decide beforehand how you will continue to pursue all of the elements and emotions that matter to you the most.
About the author: Nick Shams is the COO of Merchant Resources International, a merchant cash advance provider.