So how do you know when you’re good to grow? Here are five signs, amongst others, to look out for.
1. Customers can’t get enough of you
Seeing high demand for your products implies growth potential. If customers are queuing round the block for your cupcakes, it could be time to open a second bakery. If you’re having to turn down plumbing jobs because you’re fully booked, it makes sense to take on more staff.
However, you should do some thorough market research first. For instance, your market might be projected to shrink in the coming years, exposing you to risk. And might increased competition impact your ambitions for market share?
You should also consider whether you can grow your business without disappointing current customers. If opening bakery number two means you have less time for quality control at bakery one, you might lose serious brownie points.
2. Your bank balance is buoyant
Growth usually requires investment, and by extension good financial foundations. But what does this mean? Ideally, you want to see growth in revenue and profit over a minimum of the past three years. The longer your profit and revenue have been increasing, the stronger the signs that you’re ready to grow your business.
Cash flow is also important. You’ll need enough money in the business to keep things running smoothly while you also invest in growth. Costs could include additional staff salaries or new equipment, and you might not see return on investment (ROI) on these immediately. Lenders and investors can fund your growth plans, but they’ll want to see a strong business growth plan first.
3. You’ve perfected your processes
Do you have great processes in place? Perfecting your operations means that your existing business thrives while you’re occupied with growth. Secondly, you’re likely to scale these processes as you grow, so they must be efficient. Replicating inefficient systems means undermining your productivity and profit.
To boost ROI, you’ll also need to train and onboard new staff quickly. That can’t be done if your processes aren’t developed and documented. And you may need new processes as your business grows, such as HR standards, so it’s best that other parts of the business already run well.
4. You have time to spare
You might think the best time to grow your business is when it is at full capacity. But you should aim to expand that capacity before it gets to that stage.
As a small business owner, you’ll be hands-on with whatever it takes to grow the business, from finding bigger premises to negotiating new contracts. Even as your business grows, your attention is likely to be drawn to teething problems, such as supporting new staff or troubleshooting processes.
This can all take you away from your day-to-day duties, so think about how to balance business-as-usual with growing your operation.
5. You have specific goals
Business growth is desirable for many reasons, such as stability and extra revenue. However, growth for growth’s sake isn’t a good goal. Growing a business takes time, money and effort, and needs to be part of a strategy. You should grow with a purpose.
If you have a vision for what you want to achieve – such as bigger profits, more market share or employing staff – that’s a strong start.
