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Five Things To Consider Before Expanding Your Business

BUSINESS

Five Things To Consider Before Expanding Your Business

The thought of pushing into farther frontiers comes to most entrepreneurs who think their business is doing well. It’s understandable: the very nature of enterprise (more so in today’s world) demands that business ventures either expand in some way or recede into insignificance or non-existence. The passage of time erases the comfort of stasis, and entities that fail to move of their own accord are swept away without their permission.
Expansion can take place in a number of ways. It might mean opening another branch in some other location, developing a new product line, turning to eCommerce, or adding a service related to what you’re already doing.
Whatever the form of expansion you’re thinking about might be, it’ll be wise to consider the following points before having a go at it.

1. Your reason for wanting to expand

Perhaps, you’re convinced that your brilliant sales figures show that expanding wouldn’t be a bad idea. Or maybe you think your brand has grown strong enough for you to afford to pitch a new product to the public. Are you certain that there are reasonable grounds to follow up positive business performance or signs of apparent opportunity in the market, with an expansion? Are there factors you may have overlooked?
It’s better to have a strong, fact-based reason to expand than to decide to do so based on unrealistic notions of where you want your business to be.

2. Personal goals

Create a mental picture of your expanded business, and describe it on paper. How will this sketch flow with your personal life? Is there a potential conflict between the goal of expansion and the direction in which your life outside of business is headed?
An example: if you’re unmarried, how will having a wife and children affect your ability to cope with work? How do you intend to divide time between your business and your family?
Things won’t just get sorted out. You’ll have to be prepared for the future if you want to make it work.

3. Finances

Of course, you can’t drive your business forward if there’s no money to run it on. Is your enterprise financially stable? Can you fund an expansion from internal sources, without sapping your existing business dry? And if you’re seeking financial injections from external investors, can you convince them that the business is (and will continue to be) profitable enough to get them an attractive return on their investment?

4. The market

Guage the interest in your product (or for those similar to the new product you want to offer). Is the market big enough or growing fast enough to absorb what you’ll put out to it?
Be mindful of the general economic condition as well. It’s advisable to hold back on expansion if a downturn (e.g. a recession) looks imminent, and go ahead with it when things are better.
Study your competitors. A general trend towards expansion may indicate that there’s new ground for you to conquer.

5. Customer-focus

There’s always a risk of businesses losing touch with their customers as they expand. This is because larger organizations might find it difficult to get beyond the preoccupation with internal systems and processes which become more complex as they grow larger.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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