Business is humming along nicely, and you’re thinking about how to reach the next level. Maybe you want to open a new location, launch a new product, or hire more staff? However, before you dive into expansion plans, it’s important to make sure the timing is right for your business.
In order to determine whether it’s the right time for your business to expand, we created the following checklist:
- Strong employee team. You need a stellar team that’s ready to handle the additional challenges that may come with growing the business. Your staff may need to step up to take on additional work and new tasks, and it helps if you have leaders you can count on through the transition.
- Loyal customer base. Building loyalty with customers is key to your future success. If you have repeat customers who love working with you and rave about your products or services, the positive momentum can help propel your business to the next level.
- High demand for products or services. Increased demand is a telltale sign that your business is ready to grow. If your employees are working overtime or you’re turning away business because you don’t have the capacity, it’s probably time to actively expand. In addition, you should track these trends for a few months so you know if the increase is temporary or sustained.
- You need more space. You may need a larger building to accommodate more employees, equipment or inventory. Or, you may need a larger shop or new location to improve the customer experience. When you’re tight on space, this can be another signal that your customer base is growing and demand is high.
- Operations and systems are implemented and stable. Having efficient processes in place for operations is critical to your success, especially when you’re expanding certain aspects of the business. For example, if you need to hire new staff, you’ll want to have an employee onboarding program set up and you’ll need well-documented systems in place for every aspect of the business, from HR and accounting to operations and customer service.
- Limitations are recognized. Not every opportunity for growth will lead to success. Understand what your business is capable of at this stage and recognize when to take and when to skip an expansion opportunity. You can be more confident that you’re not overextending your business if you expand slowly, get to know the local market, and have infrastructure in place to support your growing customer list.
- Solid financials. When your business is financially strong and has growing revenues, a steady cash flow and positive credit profile, it may be a good time to explore expansion. Nonetheless, before committing, consider whether you’re witnessing a temporary profit wave or lasting growth. Growth based on a short-lived trend could spell trouble for long-term sustainability.
If you have additional questions about any of these items or if you’re considering expanding your business, talk to the experienced bankers at California Bank & Trust about financing solutions that can help you grow. Contact us at (800) 400-6080.