“When is a good time to expand my business?”
At Rockland Trust, we get asked this question all the time. But there’s no perfect answer. here’s a lot to consider when deciding to make the leap to expansion. Here are four “W questions” that can guide your decision.
Why do you want to expand?
This is the million-dollar question, and it can be a turning point for your business. Ask yourself what triggered your perceived need to expand. Was it industry trends? Competitive opportunities? Self-motivation? Use your resources and contacts to fully vet the “why” before you make your next move
You should also ask yourself what expansion looks like for you and your business. Is it moving to a different space, or further diversifying your offerings? Are you launching an online branch of your business? This will help you with our next task: setting goals.
What are your goals?
Remember that old adage, measure twice and cut once? The same holds true for your business. In order to develop a good growth strategy, you first need goals against which to measure.
What are your desired outcomes: Increased profitability, customer base growth, innovation, or all of the above? Define your goals, and apply metrics to measure progress and your success while also objectively evaluating how well you’re meeting your current goals.
Leverage the SMART model of goal planning: specific, measurable, action-oriented, realistic, and timely results.
When will you expand?
One of the most important considerations when planning your expansion is timing. Create a strategic plan that evaluates where you want to be in six months, one year, five years, and 10 years. Include cash flow analysis and other financial forecasting in your strategic objectives to determine the feasibility of expansion.
Managing Business Cash Flow and More
Who will help you, and what resources do you have?
Take advantage of your network of advisors and ask for guidance. Consider your existing resources, both from a personal and financial perspective, to help identify any weaknesses or potential challenges that exist in your plan. Consider contacting other business owners in a similar industry (perhaps in a different geographic area) for advice on how they successfully expanded their own business, and understand your financial options.
As part of your resource planning, keep in mind that you may encounter external factors that could disrupt your plans or require additional capital. Bolstering your cash flow and understanding your options beforehand will help cover you in the event of an emergency or misstep.
Our Chief Commercial Banking Officer shared additional tips for business owners to maintain success when facing the unexpected.
Short-term
To start preparing for expansion, consider the short-term impacts on your business and team. Would your employees be able to accomplish their current workloads plus any additional projects or work needed to expand? Additionally, what are the financial capital requirements needed to expand? Again, consider potential roadblocks in your planning so you can stay agile even when the unexpected happens.
Would your employees be able to accomplish their current workloads plus any additional projects or work needed to expand? Additionally, what are the financial capital requirements needed to expand?
Long-term
Understanding how expansion factors into long-term plans is equally as important. Would your current employees accommodate more work post-expansion, or would you need to hire additional employees?
Aside from adding employees, expanding can be costly. Consider expenses such as real estate costs, attorney fees, additional or new equipment, employee recruitment, training, and marketing campaigns. While expanding may result in more revenue, you may not recapture your expansion costs for a lengthy period of time. Ask yourself if the cost will be justified by the profitability of the expansion.
Applying for a Business Loan: Tips for Getting Started
This is where Rockland Trust can assist you. We can help you answer important financial questions such as “Do I need a line of credit or other loans to cover my costs?”
Talk to a trusted Rockland Trust banker about financing options to support your expansion. Expanding your business is a big decision, but with a plan, a team, and support, growth is achievable.
