3 Things To Consider When Expanding Your Business
March 29, 2021
If your business is making a profit, well done; around 60 percent of businesses fail in their first three years, and that’s because – among other things – profit was never forthcoming. If you have beaten the odds, you’re going to want to make the most of this and take the next step. In other words, you’ll want to look at how you can expand your business.
And why not? Once you’re running a sustainable business, you’ll have two options. The first is to stay where you are. If you do this, you’ll be comfortable, but you’ll also be vulnerable; competition could quickly get ahead of you, and you might start to lose money. The second is to expand your business. It might be frightening at first, and there is always a risk, but it’s better than doing nothing. If you choose the latter option, read on for some great ideas about what you need to consider.
Your Supply Chain
No matter what kind of business you run, you will always be involved in a supply chain in some way. Whether you buy goods and sell them on for a profit, or you make items, or you provide a service, there will always be someone else you need to buy from or sell to – and often both. This is the supply chain.
When you’re expanding your business, you need to know that your supply chain will be able to cope with the increased demand you’re about to put on it. If not, you will need to seek out other suppliers or other ways to provide your customers with a good service. This is where supply chain consultants will be helpful; they will be able to give you advice about what your next step should be and how to ensure your supply chain is robust enough to deal with the pressure you’re putting on it.
A Budget Contingency
When you expand your business, you’ll need to spend money – that’s why you have to wait until you’ve grown big enough and are making enough profit to make the move into expansion. Move too early, and you won’t have the money in place, and this can mean you overspend, causing major problems throughout the business.
Yet even when you are making enough profit to expand in the way you want to, that doesn’t mean you’re not taking a risk. Any time you make changes to your business and spend money on it, you’re taking a risk, so ensuring it is a calculated one is crucial. It’s also crucial to have some contingency in your budget just in case something should go wrong. You wouldn’t want to spend everything you have and leave no room to fix any issues that might happen.
Losing Your Brand
One issue that smaller businesses find when they expand is that they can lose part of what makes their brand special. If your brand is all about being local and offering a personal service, you may need to think carefully before expanding since expansion can make it challenging to stick to those principles, and you could alienate your current customer base.
Instead of opening up new branches, you might want to consider franchising instead. In this way, you can still keep your brand as you want it, but you can expand at the same time. There are other options too, but you might have to upset some customers to find many more if you want to grow as you wish.