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When’s the Right Time to Expand Your Small Business?

August 6, 2013 by Guest Author

By Ben Thomas

Your first few steady customers are finally paying all your bills – and as celebration-worthy as that is, it also raises new questions in need of executive answers. Where are the next few customers or clients going to come from? What’s a reasonable advertising budget – and how much is too much? How will hiring a new employee (or three) or renting some new space impact your rate of expansion?

Questions like these can make your small business’s first expansion feel at least as stressful as your initial launch – but a little intuitive knowledge of your expansion’s objectives, boundaries and processes can reduce even the most complex decisions down to simple “yes” or “no” analyses. Here, three small-business experts share the analytical strategies that have become second nature to them as they’ve progressed through their own business expansions.

Flow like water

There’s an old saying that water is stronger than rock, because water never cracks – it just reshapes itself to fit whatever surroundings it’s in. The exact same principle holds true in business: The more your expansions – and shrinkages, if and when those come – all follow naturally from the size and shape of your market, the less likely you’ll be to overextend yourself and fragment your team.

In other words, the clearest signs that it’s time to expand are those that make it harder and harder not to: When you’ve got so many customers that sales are slowing you down; when products are selling out too quickly for your space to hold onto stock; when you find yourself giving a lot of referrals for a service you could be providing – and so on. In cases like these, there’s probably no reason to delay an expansion, even if it feels a little intimidating.

“When we started, we only had a small space and we only had one room,” says Donna Alexander, founder and president of Anger Room. “But we started getting so much publicity, and so many customers coming in, that we actually had to start turning people away. And that was like a big neon sign: ‘OK, it’s time to get a bigger space.’”

By the same token, the clearest signs that you’ve overextended your business are those that feel like hitting some kind of wall: When the money you’re pouring into new ads and/or spaces isn’t correlating with any return; when training a new employee is slowing down sales; when you find yourself starting to give referrals simply because you can’t handle the volume – and so on. Although these signs don’t necessarily mean that you can’t expand, they do point to the fact that you’ve got some bugs that need to be worked out.

Scan for indicators

Even if you’re not drowning in customers, your interactions with the customers you do have can serve as strong indicators about whether it’s time for an expansion – and if so, what direction that expansion should take.

“You’ve got to listen to your market, because with every sale – or lack of a sale – those people are telling you what you do for them, and if you could be doing more, or doing something differently,” says Carolyn Andrews, a certified business and executive coach with Actioncoach. “One of the most important things about timing your expansion is looking at how your market perceives you.”

It doesn’t take a market research firm to find out how your customers feel – it just takes some mutually honest conversations.

Those conversations will come in handy as you analyze the shape your sales are taking, and the reasons why. Which products or services are you selling more or less of than usual? What changes in your market could account for those shifts in sales? What’s your competition doing in response? Does their response leave a new vacuum into which you can expand? “Having a really solid handle on what’s happening in your market is crucial,” Andrews says, “and it’s so much easier to get personal insight into your market’s behavior when you listen to what customers are saying to you.”

Andrews advises looking for “green lights” on all three indicators – positive customer conversations, promising sales analysis and under-adaptive competitor behavior – before you make the leap into your expansion. “When you analyze your potential for expansion in terms of those three indicators,” she says, “you end up with one simple answer: a ‘yes’ or a ‘no.’”

Jump straight in

Leaping into your expansion isn’t just a figure of speech – the only way to be sure your expansion will succeed is to throw everything you’ve got (yourself included) into it.

“In the end, there’s no such thing as a perfect time to expand,” says Stacy Deprey-Purper, founder and CEO of Better Business Together. “But you and your staff still have to jump in with a ‘whatever-it-takes’ attitude, because that’s where your reputation, your customer need and your buzz ultimately come from.”

Still, jumping in doesn’t mean jumping blind. So take as much time as you can afford and draw up a clear plan for your expansion, including employee roles, steps of the expansion, timing projections and so on. “I say that everybody needs a plan… so they can deviate from it,” Deprey-Purper says. “You don’t need a detailed long-term plan, but you need to have some idea of what you’ll be spending and where it’s going to go. I had a client the other day who spent $50,000 on decorations for his restaurant, which ate up 99 percent of his marketing budget.” In short, check that your plan makes sense as a whole before you start throwing money at specific parts of it.

A trusted group of advisers can help on that front – and that can mean a business coach, other successful entrepreneurs, consumers in your market or even a lawyer. “We were once approached by a group of investors who seemed very kind and polite in person, but who actually wanted to take over our company,” Alexander recalls. “When we sat down to sign the paperwork, they suddenly told us, ‘We want 90 percent of the company, and you’ll get the other 10.’ Luckily we’d hired a lawyer to look over the papers for us.” It’s situations like this that demonstrate why it’s vital to have some professional second-guessers in your corner.

At the same time, though, it’s important to keep in mind that you’re the boss, and that the decision depends on your instincts in the end. “If you’ve got too much thinking and not enough doing,” Deprey-Purper says, “you can overthink yourself out of taking action. No matter how much planning you do, you’ll always get some curveballs – and you have to take those as opportunities to learn about your business and plow forward.”

Author’s Bio: Ben Thomas writes about careers in marketing, among other business career fields, for The Riley Guide.

Filed Under: Marketing /Sales / Social Media, SOB Business, Strategy/Analysis, Successful Blog Tagged With: advisors, bc, Coach, expansion, Hiring

Writer, Coach, Strategist Girl — Not Seller Girl

October 10, 2006 by Liz

I've been thinking . . .
This is the 1009th post on Successful-Blog and soon I will celebrate the one-year anniversary of my first post here. A lot has changed since then. I’ve grown up as a person and as a blogger with this little blog by my side.I’ve met so many dear, and deeply close friends in that time. We’ve made each other better.

I love every reader who takes time to comment and every reader who simply reads what I write. I look forward to coming here every day to see what happens and who will stop in to say something.

I love this little blog. I remember the first post I wrote and every post after that. This blog has grown so much it’s now half my life. It’s part of me, and I’m part of it.

Now that a year’s coming to a close, and I stop to breathe. I look around at where things are, at what I see. I realize that sometimes folks make a big deal about this blog and me, but truth is, I’m just a working writer — supporting my family and a big university.

I’m finding that as a only one person, who writes for a living, to be fair to my family, and to be able to keep doing what I love so much, I need the time spend on Successful-Blog to be earning for me.

So after much thinking, I’ve decided to add some affiliate products to the sidebar. I want you to know how I’m going to choose them. The products will only be those that I would personally use or buy to give to my friends. End of story.

I value my name, and if a product is there, my name is on it.

That is the what, the why, and the promise behind my doing it. There will be no sales pitch. If I write about a product, every word I say, as always, will be what-I-would-say-to-my-best-friend true.

Of course, you can always hire me, too. I am the nice one. 🙂

Liz's Signature

Filed Under: Community, SOB Business, Successful Blog Tagged With: Adding-affiliates, bc, Coach, I-was-thinking, Not-Seller-Girl, Strategist-Girl, writer

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