For most entrepreneurs, building a customer base and maintaining it are the first stepping stones to success. After that milestone businesses often feel ready to aim higher? and expand their business.
Future growth will be part of any small business owner’s initial plans. However every aspect of this will need careful consideration, whether it be from moving a home based business into a rented work space or accessing a global market.
For every stage of business growth, a business owner will need to look for reliable indicators that their business is ready to scale up and ask themselves some specific questions:
Have you met your initial goals?
First of all, business owners will need to review their original business plans and think about what they have achieved. If you have been able to fulfil your initial projections or have exceeded them, you can be more confident in taking the next step.
Have you done your research?
If you are considering expansion into a new market or a new location, it is vital to do your homework. What works in one place may not work in another and rushing to expand without looking into the new area or customer base can have a devastating effect.
Do you have the right team in place?
In order for any business to grow successfully, it needs a good team of people behind it. One of the crucial deciding factors for expansion is having a dedicated team who support the plans and who are invested in the success of the company.
Do you have the funds?
One thing small business owners often forget is that growth is expensive. There’s no doubt that the expansion will yield good returns in the future (it typically takes up to four months for the sales to catch up on the investment) but, like starting up, it will take time and money in beginning.
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Many small businesses misjudge their sales cycles and, in turn, their ability to expand – causing a deficit in their cash flow. So, it’s extremely important to make sure you have considered your funding options before you commit.
Have you reached a good level of brand awareness?
Has your brand generated good feedback and in turn gained itself a good reputation? And has your business got to the point where you are no longer having to approach clients?
If you are filing requests and organic interest is flooding in, then it can be a sign that your business is in a good position for expansion.
Have you anticipated the commitment?
Don’t forget to think about work-life balance and assess whether your current lifestyle can handle the inevitable changes to your workload.
While it is natural to want to expand, some business owners are not prepared for the additional commitment.
Growing your business can affect many things (including your family and personal life) so make sure you weigh up your options and keep in mind that you may have to make some sacrifices.
Have you considered potential foreign markets?
Have you considered expanding from local to global? If so you will need to consider several things:
It is vital to do your market research, just as you did when you were starting up. You will need to ensure that a customer base exists in the country you wish to expand into – the product or service that you provide may be popular in your country but may not have the same appeals elsewhere.
When considering a foreign market, you may be able to attract local or national grants, funding and other advice. You may want to use the US Trade Administration as a starting point.
Will the foreign market be compatible with your current market?
According to Entrepreneur.com ‘less than 25 percent of U.S. business ventures abroad are successful’ and Hilka Klinkenberg, founder of Etiquette International puts it down to that fact that ‘Americans don’t do their homework or because they think the rest of the world should do business the way they do business’.
Any business owner considering foreign expansion should always consider barriers to entry, exchange rates, proximity and any significant cultural differences. The more similarities with the countries that you currently operate in, the easier the process will be.
Look back at your business plan: are you meeting your set goals in your original territory? Having defined objectives and ensuring that you are committed to achieving the goals builds confidence, not only internally but also externally.
Finally, as with any business expansion, make sure that you are realistic. Think about what you can achieve and what you and your company can handle before taking the leap.