Most entrepreneurs have a vision when they launch their business. The aim is to grow and develop. Expanding a company is not always easy, and timing is critical. In this guide, we’ll explore some essential questions to ask before you attempt to grow your business.
Is there a demand?
The most important question to answer when you’re thinking about expanding your business is, ‘Is there a demand?’ To generate profits and make your venture successful, you need customers. Analyse sales data, keep a close eye on the figures and monitor consumer trends and buying habits. If sales are increasing and you’re struggling to cope with rising demand, this is a sign that expanding your company could pay off. If you’re struggling to sell the stock you’ve got or fill your reservations book, it may be best to wait and focus on trying to attract customers and create leads instead.
Take care when growing a business amid rising demand for products or services that are linked to buying trends that might not last. The pandemic drove a surge in the demand for products such as loungewear, cleaning products and face coverings,for example. It is possible to capitalise on items that become highly sought-after, but think carefully about investing heavily in stock that may not be in demand for long.
Is your business profitable?
Managing your money is vital when running a business. The majority of new businesses fail as a result of cash flow issues and sustained financial pressure. Before you invest more money or borrow to grow the business, make sure that it is financially viable. Ideally, you want to be generating profits before you venture into growth territory. If you already have substantial debts, and you’re looking to borrow more money to expand, there is a chance that you might not be able to get into the black and start turning over a profit.
Is there scope to develop the company?
There are several ways in which businesses can develop. Before you make a decision about the future of the company, consider whether there is scope to expand. You may wish to consider options such as opening a new store, branch or office, exploring new destinations and expanding online sales to international markets, for example. The priority when answering this question is research. Research the market, analyse local, regional and global trends and think about what it would take to hit targets and achieve goals. If you’re considering going international, you’ll need to think about shipping and logistics, working with a customs broker, marketing your products and services to a new target customer and hiring additional members of staff. Plan meticulously and make sure you understand what growth looks like for your business before you borrow or invest funds.
Have you got a loyal client base?
To make any kind of business successful, you need customers and clients. If you have a loyal client base, this is a positive sign. High retention rates are good for brand image, and studies show that existing customers spend more than new clients. If you have a large number of repeat customers, as well as new clients, expanding may prove lucrative. If you don’t have an established customer base, it may be worth devoting time and effort to building relationships and encouraging loyalty before taking the next step. Loyal customers are not only more likely to choose you over rival companies, but they will also recommend your business to others and leave glowing feedback. More than 90% of consumers now read online reviews before buying products or contacting a business.
Have you got the necessary resources?
Growing a business is not as simple as finding another store to rent or adding new countries onto the list of delivery options on a website or app. Development costs money, and you may also need to think about additional factors, including hiring more employees, outsourcing or working with partner firms to expand operations. Make sure you analyse the costs involved so that you have an accurate idea of how much you will need to raise or borrow. Make plans for the weeks and months ahead and ensure you have a realistic time frame. If you need to hire new employees, give yourself enough time to recruit new staff and train them before a new store or office opens. You want to create a positive first impression from the outset. If you’re not fully prepared, you may not be able to deliver a service that matches customer expectations.
Most business owners have ambitions to develop and expand. Growing a company is not always easy, and it’s not always the right decision. Timing is key. Before you start planning your next move, answer these essential questions to give your business the best possible chance of success.