A growing business can be a good problem to have, but a few solid months doesn’t necessarily mean it’s time to expand. There are, however, some other markers to look for when deciding if an initiative to expand is right for your company. Check out these five indicators that it may be time to find new ways to grow your business.
Long Standing Profitability
It may be exciting to see your company finally start to turn a profit, but if it’s a recent phenomenon, wait until your financial success is a little more seasoned. Once you’ve hit three years of profitability, it’s time to start thinking about next steps for your business. Anything under a year or two probably isn’t long enough to determine if your business model is viable in the long-term.
The strength of your customer base is another indicator of your company’s readiness to grow. Repeat customers demonstrate two things about your business. The first is that you’re offering a quality product and experience for your customers. The second is that there’s plenty of business demand to keep your core business going while you expand.
Increasing Market Share
In addition to ensuring repeat business, it’s important to look at the growth potential for your general industry. It’s a good idea to do some research in this area while considering your expansion options. If you’re a local brick and mortar store or restaurant, start by researching demographics and population growth trends in neighborhoods that seem attractive for a second location. For more virtual operations, take a look at market saturation in your industry, as well as any data you can find for projected growth in that arena. If increased demand looks promising, then an expansion could be a good idea.
Another good sign for expansion is when your workload or demand for orders is too much to keep up with. If you’re turning down business because you lack the working capital to get your orders manufactured or can’t hire the right employees to help your business grow, it’s a good time to start coming up with a strategy to reach those next steps.
Whether it’s too much inventory in your warehouse or too many people in your restaurant, the right amount and type of space is key for a lot of businesses. An expansion can potentially provide your business with better efficiencies as well as better growth opportunities. Either one can be a pivotal tool in increasing your company’s bottom line.
Growing a business can be an exciting time for any company. By performing due diligence and looking for these key signs, you’ll be far more likely to meet success in your next growth stage—whatever it may be.