Expanding your business is valuable to your long-term survival, but knowing when to do it, and growing at the right rate is equally important. In a past study by Kauffman Foundation and Inc, two-thirds of the fastest-growing startups end up failing. Further research also showed that fast-growing companies can perform worse in the long term than their slow-growing counterparts. Growing your business too early or too quickly can not only jeopardize your future revenue, but it can also spread worry in your workforce, damage your reputation and make your business financially vulnerable. Knowing when and how to grow your business is a consideration every business owner needs to know– and contemplate. From narrowing down the growth strategies that will work for your business to ensuring you have the right resources in place to support your expansion places, here’s how to get your business growth plans off to a good start.
Time your growth right
Knowing when it is time to expand is just as important as the way you choose to expand your business- if not even more important. Growing your business can take a lot of time, resources, and finances to plan and execute. Therefore, you should be sure that there are strong signs it is the right move for you- and your business. Indicators that your business may be ready to grow can include a business struggling to keep up with orders, outgrowing resources such as office and storage space, or demand and industry projections that have been consistently bright.
Other experts also recommend growing your business after you have enjoyed at least 3 profitable years. This is because expansion can be an expensive venture, and you want to be sure that your business model is a sustainable one. Short-term profitability can stem from a recent surge or seasonal demand. However, it does not always indicate the ability to finance an expansion and keep your operations going in the long term- particularly if you plan on financing your expansion with business loans or debt.
Adjust your resources and contingencies to align with your new risks
Every good business expansion plan needs the support of the right people and assets, in the right place and at the right time. Your expansion plans will need additional resources to make it a reality including additional financial outlay, and potentially additional staff. There will also be a bump in overhead costs like storage space, workers’ benefits, and delivery costs. Your business budget and cash forecast need to be ready for that increase ahead of time.
If you are increasing your workforce size, the 2021 workers comp rates can give a good idea of the additional employee insurance costs you are looking at according to your state of operation. Workers compensation insurance is compulsory in most states, but the rate and circumstances depending on state policies, your company’s payroll, and employee job classifications. Similarly, some market research on storage facilities in similar areas to your new warehouse can give you an idea of additional storage costs.
Implement the right strategies to support your growth
Once you have nailed down the right time to expand, it is time to consider how you will do so. Some may choose to move into new markets, while others opt to expand their product line, or target other markets by adding an expanded delivery radius or an eCommerce store. Regardless of the method you choose, it is important to do your market research first. Get to know your customers, and what they want from your brand. Encourage feedback, both positive and negative.
A good strategy to grow your business right now is to improve your website and homepage. With more people opting to shop online or research before buying online, optimizing your webpage for SEO and easy navigation can improve your conversion rates. Also, think of making your website mobile-friendly. More consumers are shopping from their phones or by voice search these days.
Finally, think about improving your business efficiency and speed if you want to grow your business. The faster you can do business transactions, the more you can process. Address the speed of basic routine tasks like social media management, invoicing, or processing. Consider areas for outsourcing or automation to improve costs and efficiency. Also, keep an eye out for warning signs you are growing too fast. If you find that customer and employee complaints have amped up, cash flow gaps are increasing or your staff is crumbling under excessive work demands, it may be time to slow it down a bit. It is better to take your time and do it right than have to do it all over again because you did it wrong before.