It is every start-up entrepreneur’s dream to get to the point where they can expand their business. It is that pivotal point where you think, right, now it’s time to open a new branch or its time to purchase another business. It is a part of the life cycle of a business where the business owner inevitably asks – How do I know its time to expand my business?
The choice of which process to follow is not an easy choice, but the key identifiers to look for to see whether your business is ready to expand is a bit easier to identify.
I hope you can identify a few of them already!
1. You get business from outside your usual or target market.
When you start receiving an increased amount of business from outside your usual or target market, then you should know it is time to grow or expand your business.
It is very important for you to know who your target market or your usual market is. Once you start receiving leads and business from outside of your usual geographical region you service then you should start serving these new regions.
If you target mainly people in their 30’s and people in their 20’s start buying from you, then maybe it’s time to start selling to a younger market. The best example of knowing you are ready to expand is when a client asks you to open a new branch.
One of our clients was asked by their biggest client to open a branch 290kms away from their head office. This branch has now outgrown its original purpose and is booming.
2. Your business is profitable, so people like you!
A profitable business is an indicator of a business with a good product or service which the market wants. The market only responds positively to a product or service they want.
This positive reaction will translate into a profit for your business (products which a client needs, but not necessarily wants, i.e. petrol, are classified as a grudge purchase and should be excluded from this discussion).
Thus, if you are selling a product or service which a client would want, and you are able to turn that want into a profit, it means that you are on to a good idea.
If a section of the market wants your product, then the chances are that another market might also want your product or service.
3. It is easy to scale your business
A business which is scalable can easily increase its turnover or uptake from clients without a strain on the expenses or resources of the business.
To put it more simply, a business is scalable if it can serve more customers with the same quality product or service without any hassles or major strain on the business resources and while making more and more profit.
A business which is dependent on one person or its owner for an income is not scalable. Its turnover is dependent on the input of one person, and we all know, we only have 24 hours in day.
A business which is dependent on a specific asset for its income is also not scalable unless you can get more of the same assets for relative cheap.
Thus, to expand your business, you must be able to handle more and more clients with ease without incurring a lot more costs.
4. Your industry and/or market is growing
This is probably one of the easiest signs to see that the time is ripe to expand.
During a time where an industry is booming, like the construction industry expanded before the 2010 soccer world cup, it is time to expand and get more market share.
This is normally one of the easiest times to expand your business, but it is also important not to over extend your resources and allow the service levels to your clients to go down.
5. Other people are copying your business model
An entrepreneur once said to me that any business owner must wish to be copied. At the time of him saying this, I did not agree.
In my mind, being copied by someone else meant that there is now more competition ahead of you.
These days, I believe this is a massive compliment to you and your business if someone copies you or even steals your business model and systems.
This means you are doing something right and someone else also sees the opportunities you have created. When someone else copies your business, be flattered, and know that you are on the right path.
This is a sign that you must expand your business to new avenues or markets. Just make sure that you are offering the client more than what the person copying you is offering to retain your clients.
Remember, you have an advantage over the copier, you are already serving a defined market.