As a business owner, it can be difficult to determine when the time has come to grow your business. Growing your business could mean opening a second location or moving your office to a larger space. It could also mean expanding into new markets beyond your core business or increasing your workforce. Whatever your expansion plans, growing your business while best serving your employees, existing customers and new clients can be challenging.
Of course, financial — including positive cash flow and access to loans — is key. However, successful business growth also requires industry insight, clear marketing strategies, a consistent brand, a dedicated team and a boss who can delegate effectively. The first step to crafting a successful growth strategy is figuring out whether your business is ready for expansion. In this post, we explain exactly how to know when it’s time to grow your business. From establishing a brand to identifying your target market, we list ten indicators that it’s time to expand your small business.
10 Ways to Know It’s Time to Grow Your Small Business
1. You Have an Established Brand and Your Goals for Expansion Align with That Brand
One way to know it’s time to grow your business is that you have an established brand with which your goals for expansion align. In his article “To Grow Or Not to Grow: The Question For Every Business” for Forbes, Shawn Freeman explains. The trick to managing small business growth is to keep “your company in alignment with its own purpose and values.” This is true regardless of rapid growth or slow, incremental growth.
It might be time to expand your business if your business has established brand guidelines that new employees can easily execute. You might also be ready if clients, employees and partners all know what to expect when working with you. Your goals for expansion must reflect the business’s mission and identity. Even as you explore new locations, new markets and new services, you must have confidence that your brand will remain intact.
2. You’re Booking Out Clients Far in Advance
Do you have more business than you can handle? If you and your team are booking out clients weeks, months — or even years — in advance, it might be time to expand. In her article “How to Grow Your Business” for The New York Times, Kristin Wong elaborates. According to Wong, if you have too much business, “it’s probably time to grow.” Make sure that this influx of business is consistent, however, and not just a “sudden spike” in activity.
As you develop a new business model for your growing business, Wong recommends interviewing past and retained clients. Wong suggests “asking them about satisfaction, interest in new products [or services] and overall feedback about your business.” Look for patterns in comments from existing customers and consider different strategies for expansion before proceeding.
3. You Know Why and How You Want to Grow
Your small business might be ready for expansion if you already have an idea of how you want to grow. For example, you might be interested in a new sector for the business. You might want to expand the scope of your interior design business to cover architecture and structural engineering. You might simply wish to move from your home office into a commercial office space. Alternatively, you might be searching for a partner or a similar business with which your small business can successfully merge. Opening a second location to take on additional business in new cities is another common way emerging companies expand.
In their article “Should You Scale or Should You Grow? The 2 Strategies Are Not the Same” for Entrepreneur, Pete Canalichio and Mark Di Somma explain. Canalichio and di Somma write that you must “know why you want to grow” to be successful. Quoting UPS’ Jeremy Melis, Canalichio and di Somma note that the “‘the goal isn’t necessarily the speed of…growth.'”Rather, the goal of expansion is “‘to best position your business to achieve what you’ve defined as success.'” This could mean “‘revenue growth, geographic expansion, a community of loyal customers or a better quality of life for yourself and your employees.'” Either way, knowing how you want to grow your business and setting achievable goals that send you in the right direction is essential.
4. You Have Identified and Connected With Your Target Market
It might be time to expand if you have identified and connected with your target market. Not only has your small business experienced a surge in new customers, you also have repeat customers and referrals from current customers. Your client roster, website engagement and digital marketing campaigns have defined a distinct customer base that identifies with your brand.
As Mandy Porta tells Inc., “identify[ing] your typical customer and tailor[ing] your marketing” is vital to building “a solid foundation.” Once you understand the needs, preferences and demographics of your target market, you can expand your business in a more focused way. Without this type of insight, small businesses struggle to expand efficiently and often burn out.
5. You Are Financially Prepared for Growth
Next, your business must be financially prepared for growth. This means that you have enough cash on hand and can secure a loan or other resources if your business demands it. This is essential as spending money is an unavoidable part of business growth. As your business grows, you will need extra capital to invest in your new location, product line and/or additional employees. Your business might be ready for growth if your business finances are stable and your cash flow is consistent. You must also have steady profits, and you have access to loans.
Of course, consistency is absolutely key. In fact, an article from Inc. identifies “cash flow crises” as the “number one killer of small companies.” As the Inc. editorial team notes, neither revenue nor profit alone “make a functioning business.” Rather, business growth must “be guided by a business’s ability to generate and manage cash, not simply by making a profit.”
6. Your Team is Ready to Expand Your Business
Having a team upon which you can rely is foundational to successful business growth. If your team is ready for an expansion, your business might be ready too. Surrounding yourself with partners and employees who are excited and personally invested in your business’ growth will help the ensuing expansion maintain momentum. As Shawn Freeman notes an article for Forbes, growth at his company “has been precipitated by [their] staff…[which is] keen to take on new challenges.”
In addition to a team of seasoned employees you can trust to expand your business, you must also have systems in place. As businesses add to their workforce, expand product offerings or open more locations, they must standardize certain processes. In his article “Midsize Companies Shouldn’t Confuse Growth with Scaling” for Harvard Business Review, Ron Carucci explains.
According to Carucci, small businesses must “welcome standardization” and abandon the idea that standardization kills creativity. In reality, standardization frees up time and energy that otherwise would have been dedicated to tedious, easily automated work. Many businesses reject standardization in order to preserve the “personal touch” clients expect. However, Carucci argues that “organizations without standardized processes become a mass of confusion, redundancies, and cost overruns” over time.
7. You Know There is Room to Grow in the Market
Do more customers request related services than when you first started your own business? If so, it might be time to expand your existing business into similar but distinct projects that clients continually ask about. As an interior designer, for example, clients might often ask for help on a structural remodel or rebuild. Partnering with or bringing on an in-house architect could help you better serve existing clients and reach new markets. It might be time to expand your business if you know there is room to grow in the market.
8. You Have Partners Lined Up
The right employees make a big difference in the stability and potential of a business, but so do the right industry partners. If you have both established and burgeoning relationships with respectable vendors and other businesses in your industry, expansion will be more seamless.
For example, the Laura U Design Collective regularly partners with Ann Sacks, Monogram, Hudson Valley Lighting and Sherwin Williams. Our team partners with these vendors, manufacturers and designers on both small projects and whole home remodels. Without relationships like these, it could be more difficult to expand your business.
9. You Are Prepared to Let Go and Delegate
When you first founded your business, you were probably enmeshed in the minutiae of everyday operations. However, each owner must let go and delegate if they want their business to grow. If you are prepared to step back and allow employees to handle certain aspects of your business, it might be time to expand. In their article “The Five Stages of Small Business Growth” for Harvard Business Review, Neil C. Churchill and Virginia L. Lewis explain. According to Churchill and Lewis, small businesses must be “decentralized and, at least in part, divisionalized” before expanding.
As a business prepares for growth, managers and employees naturally undertake more wide-ranging responsibilities including both “operational and strategic planning.” Put simply, “the owner and the business have become reasonably separate.” Despite this separation, “the company is still dominated by both the owner’s presence and stock control.” Business owners who either demand total control or fail to delegate effectively are hardly well-prepared for expansion.
10. You’ve Physically Run Out of Space
Last on our list of ways to know that it’s time to grow your business is when your team has run out of space. Is your team scrunched desk to desk in your living room, home office or small commercial space? If so, it’s probably time to accept that your business is already growing!
Final Thoughts on Expanding Your Small Business
Whether you are developing your first business or your tenth, expanding can feel like a gamble. However, if you have an established brand, a reliable team, consistent cash flow and solid relationships, it might be the right time. If you can delegate tasks to employees and partners, your business can likely handle the high demand from both new customers and returning clients.