As a small business owner, you may have put a lot of time, effort and resources into gathering information, doing research, finding start-up financing, and due diligence; all to get your business off the ground. Hopefully this all paid off and your business has picked up momentum – but now what? You may feel like expansion seems like the natural next step for your company’s pace of growth, or simply that expansion is the direction you would like to steer your company towards next.
Before running wild with your entrepreneurial ideas however, this may be a good time to take a step back and consider your company’s most urgent needs. The first step to getting ready for expansion is asking: what is more important now, growth or consolidation?
Good business sense will answer to growth; but mindless chasing of revenue can be harmful for your business.
Strategic Focus. Whether you’re battling a bad economy or even trying to keep up with the market’s high demand, you may be inclined to take whatever business comes your way. By doing this, you may find that your company’s positioning is off course – or non existent. When the opportunity for more work and more money presents itself, saying no to work that is not in line with your company’s scope of work and specialty can be difficult; but it’s important to keep focused on what your business model stands for. Having a defined service package to offer is imperative to eventual growth.
Bad Customers/Clients. Not all customers are equal. Some can be very demanding, and that may help your company’s development; but others may be demanding just because they are bad to do business with. A customer may drain more of your time and resources than what its worth – both in financial value and prospect of future work – leaving your resources tied up from other business development. Learning to be picky about your customers is an essential step toward creating an environment for growth.
Time Value. Many start-ups and small businesses have all the right attitude and energy, and spend tremendous amounts of time making money. However it’s just as important to invest time and resources internally into finding and developing new businesses and markets. Streamlining business development models and procedures internally, networking in niche areas and markets, working on internal refining of your business, and the likes, are all ways to prepare your business for expansion.
Once you have addressed the preliminary questions and have come to determine that your company is in fact ready for some solid steps toward expansion, the next challenge is to figure out how. Choosing the most suitable method will depend on the type of business you own, your available resources, and how much money, time and sweat equity you’re willing to invest all over again.
Open a new location. This may not be the best option for your business, but it’s certainly one to consider. Physical expansion isn’t always the best growth answer without careful research, planning and number-planning. Make sure you’re maintaining a consistent bottom-line profit and that you’ve shown steady growth over the past few years. Other than that, remember that opening a new location is pretty much the same as opening your first location in most planning aspects.
License your product. This can be an effective, low-cost growth medium, particularly if you have a service product or branded product.
Form an alliance. Aligning yourself with a similar type of business can be a powerful way to expand quickly. Pooling resources, ideas, and most importantly client circles and networks may prove to justify sharing the profits.
Diversify. With strategic focus in mind, diversifying is an excellent growth strategy, as it allows you to have multiple streams of income that can often fill seasonal voids and, of course, increase sales and profit margins.
Expand to the Internet. Bill Gates said that by the end of 2002, there will be only two kinds of businesses: those with an Internet presence, and those with no business at all. This may be overstating the case, but an effective website is becoming an integral part of business today. Design and programming are also important, but it’s your content that will draw a visitor into your site and get them to stay.