A guest blog from Boomerang’s Paul Dewick:
Remember Slinky’s? They were essentially a long, very flexible spring that you placed on the top step of a set of stairs. Then you would slowly tip the top of the spring and, assuming you had positioned it right it would gracefully descend the stairs and settle at the bottom in a neat tube. If the positioning was wrong, then they would start well but gradually begin to slip off their centre of gravity and end up in a tangled disaster. In the worst-case scenario, the loops of metal would become irretrievably entangled, and you had to throw it away.
Expanding your business is very much like this. If you have everything right, it will trundle away, and you will be fine. Get it wrong, and you will either not have the momentum to set off on your journey, or you will find yourself in a mess.
So how do you know when you are ready to expand? Well, there are no hard and fast rules because every business is unique but here are five suggestions of things that you should be confident about before you start.
1. Have you got the financial momentum? Expanding can be as financially challenging as setting up your enterprise in the first place. Will you need new staff, premises or marketing funds? What happens if your expansion doesn’t go as planned and you have a lean few months? It’s vital that you plan your finances very carefully.
2. Have you got the sales potential? Often people mistake a good sales ledger as a guarantee that the revenue will transfer to a larger business. It isn’t always the case, particularly in a finite market place. You need to ensure that you can produce accurate and realistic sales forecasts that will support your next step.
3. Have you got the team behind you? If you are currently running a very small team you may find that expansion is going to put additional pressure on them. In small enterprises, the teams tend to already be under pressure and have a ‘jack of all trades’ mentality. Will your expansion be too much for them? What about management roles that may be needed in a bigger team as you expand?
4. Are your customers asking you to expand? One of the best pieces of advice I ever heard about creating a viable business was ‘find a key that fits the lock, don’t look for the lock to fit your key’. If your existing core customers are pushing you to the limit and still asking for more then you probably have a pretty good indication that you have a market.
5. Are you ready? Not the business, not the customers, not the investors and shareholders… you. As the person leading the charge into an expansion, you will need to be able to maintain that initial momentum for at least months and maybe years. Think back to the days when you started up your business and only go ahead if you feel confident that you can do it all again with an expansion.
There are probably 50 more things we could add at this stage, but if you answered positively to these five, then it may be time to look seriously at the next step.
Just like the slinky at the top of the stairs, you will only reach the end successfully if everything is lined up when you start your journey.