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.