6 Things to Consider Before Expanding Your Business

If you are thinking about expanding your business, there are quite a few things to consider beforehand. Growth is filled with opportunities and challenges. However, by being critical of several factors within your company, you will know if expanding is the right path for you. 

Define your goals

Write down the goals for the future of your business and think about short-term, medium-term, and long-term plans you want to accomplish. These goals should range from specific to broad, but it’s a good idea to have a step-by-step layout for all of them. These goals will then become your roadmap to help you determine whether you need to expand or not. 

Make sure that when you create your plans, you take into consideration any negatives that may arise, such as over-budget projects, bad hires due to not conducting a background report, or a decrease in product quality due to a ramp-up in production. Plan ahead as projected expenses for growth are most likely going to be more expensive than you expect. Be sure to budget an extra 20% to ensure you give your business the best chance at success. 

Evaluate your vendors

If your expansion requires your vendors to increase their inventory, you need to make sure that they will scale along with you. Even though you are going to increase their business, you still need to make sure that they can provide whatever you need with no bottlenecks. If not, you need to find somebody who can, or you may have to figure out how to replicate it in-house. 

Look at your financing options

Depending on the cash you have on hand, you may be able to pay for your expansion right away, but in most cases, you’re going to need a business loan. Whether you are buying new equipment, renting a new office, or expanding your products, each of these requires a significant amount of funding. Make sure you are ready beforehand, especially for bumps you may hit along the way. 

Conduct research

Make sure that your market is ready for growth as well. If you are considering opening up a new location, use your research to make sure that it can support your business. If you are going to offer a new product or service, make sure that you are filling a need that the market wants. You can get this information by analyzing sales and studying your customers. 

Evaluate your team

When expanding your business, you will most likely need to expand your team as well. Hiring and training are expensive in terms of time and money, and even more so if it doesn’t work out. Make sure you do a full audit of your current staff to see where your strengths and weaknesses are and what you need to shore up in the future. 

Do a cost-benefit analysis of whether a new-hire will bring in more value than they are worth. If the numbers don’t add up, see if you can hire someone part-time, as an intern, or as a subcontractor. 

Ask for help

If you are having issues with any of these steps, it may be necessary to bring in some experts. Hiring a business consultant can help answer any questions or problems you might have about expanding your business. A great consulting firm will have access to research and data that might not be available to you. They can share their expertise and best practices to help you get ready for a potential expansion. 

By evaluating these tips, you can decide if it is prudent for your company to expand. It is recommended to consider each of these items to make sure that you don’t make a mistake.