Considering expanding your business? You need these in place first
Photo by Mohamed hamdi
Growth is a natural process for any business. Being able to support your current level of operations and facilitate expansion plans can enable you to uncover the scope of possibilities within your company. However, for many businesses, the scaling process should take time. It’s crucial to have a well-defined roadmap detailing the process before starting any changes. This roadmap will give you a sense of control and guidance, ensuring you’re on the right track.
Harvard Business Review found that many startups failed because they tried to run before theory could walk, and accelerated growth was ultimately their downfall because they were unprepared and scaled too quickly.
So, what should you consider before implementing expansion plans to avoid becoming another failed statistic?
Focus on consistency
In the first instance, when considering whether you’re ready to expand, you need to address your current consistency. Are you able to consistently meet the demand already placed on your business? Are you meeting deadlines? Shipping targets? Can your staff reasonably manage their current workload with ease? If you answer yes or no to these, you can consider slowly increasing your capacity to help you keep hitting targets and diverging the same service while increasing your output so you don’t drop the ball.
Are you compliant?
Compliance is a significant factor in whether or not you should scale your business. It’s not just a box to tick but a crucial element to ensure a smoother expansion. Are you losing money due to neglecting EHS, or are you unaware of the financial impact of EHS on your company? Do you need to obtain further permits, qualifications, or training for your plans, or do you need to meet other regulatory standards to ensure you are environmentally and operationally compliant? Because if you’re not compliant now and you do scale, you will take bigger risks. The stakes can be even higher; fines, injury, loss of productivity standards, and more will come hand in hand with non-compliance. Being compliant will make you feel secure and prepared for the challenges ahead, regardless of when you move forward.
You have a good cash flow
You need good cash flow to be able to support your expansion plans and ensure you can fund your requirements for moving from A to B. Are you generating a profit on a regular basis? Are you meeting your financial obligations, and can you afford to bankroll the changes and sustain the business should you take a hit once you roll out growth plans?
Ideally, you want around a year’s worth of expenses to support your business should you not make any money, or your expansion plans cost more than originally thought, or don’t work out as you wanted. If you cannot support this or you don’t have a good cash flow right now, stop and wait until you do because this won’t be the magic cure to make you profitable; the opposite will likely happen. A good cash flow will make you feel financially secure and ready to take on the challenges of expansion.