Every business owner has a dream of taking their
company to the next level, especially when the sales keep increasing or when
they feel overworked and when they start running out of space.
However, these are not the signs you take into
consideration while planning business expansion. The major signs that your
business is ready for expansion has a lot more to do with making sure
everything is in place for the expansion to be sustainable.
If the expansion is initiated without a proper
foundation in place, it can majorly affect your profits, culture and can also
lead to business failure.
To avoid these impacts, look for real signs which
indicate that it is time for taking your business to the next level. According
to us, here are three signs your business is ready for an expansion.
1: Corporate Structure
& Financial Management
It is important that you have a strong legal and
financial structure in place. Thus making sure that your business is legally
well protected and has enough funds at the same time to make smart decisions.
Legal issues here for instance would arise if you
established your business as a sole proprietor and have grown it to a level
where you require adding more employees. At this level, a wise decision is to
consider your business framework and create a Limited Liability Corporation
(LLC) or Corporation. On the other hand, if your business is an LLC and you are
planning to go public, then you need to convert your company to a corporation.
The framework you decide upon will in turn have
impact on the types of funding you have access to, how you run your business
finances and how much personal finance protection you have.
When it comes to managing your business finances,
you need a keen understanding of your accounting. If you have never paid
attention to your business finances before, you might as well want to change
your perspective. As your company gets bigger, you need to get more involved in
understanding your business finances.
You also need to have enough funds while expanding.
If you doubt that you will fall short on money during expansion, we suggest you
to secure funds beforehand from a traditional bank or an alternative finance firm.
Overall, you need to have deep understanding your business finances and need to
effectively allocate capital and resources for future profits.
2: Good Systems in Place
If you do not upgrade your IT infrastructure and
other systems while expanding your company, you will face problems with their
quality of services. Moreover, it will also affect your corporate culture. It
will frustrate your employees as they may not know what can be done to overcome
the issues or they do not have required tools and software to complete the
assigned tasks, making the environment stressed and defeated.
If this isn’t bad, lack of good system will make is
extremely difficult for you to sell your company in future (if you ever wish
to). Hence, always upgrade to the latest technologies and IT infrastructures
while expanding. It is a one-time investment and will overall benefit your
company in numerous ways.
3: Have a Growth Plan
Before you start with the expansion, you need a well
drafted strategy in place. Although as you grow, you might end up pivoting away
from your initial goals, but without a strategy in place you will not be able
to build your company in a way that you actually want.
You can also hire a professional to help you manage
some business operations. But if you don’t hire some help for things you need
to delegate, you are just adding more responsibilities to your plate.
Your growth strategy should explain how you are
planning to allocate your capital during expansion, what your staffing plans
are and whether or not you are going to manage the growth on a daily basis.
The Bottom Line
Most small business owners think that they are ready
for expansion when they feel overworked and when their customer demand starts
to increase. However, unless you have a strong foundation for your expansion,
you will come across several obstacles keeping you from taking your business to
the next level.
