How to prepare for business expansion
Growth is great. It's a sign your business is doing well and can lead to greater profits in the future. Growth is also risky, however. When you're expanding to take advantage of high demand for your products or services, overextending – and then failing – is a very real possibility.
So, how do you prepare for a successful business expansion?
Create scalable processes
Having business processes that can scale up to any size is a boon for those looking to expand. If your processes are only viable at a certain size, they will need to be rebuilt as your business grows. This just adds further stress to an already stressful time – staff need to learn a new way of doing things as well as potentially taking on more work.
The best option is to design your internal processes with scalability in mind in the first place. That way, when you're in the middle of expansion, your team will still be familiar with everything they're doing.
Plan, plan, plan
Having a plan for everything is key for solid and safe business expansion. If you don't know what you're going to do, you're likely to run into problems when it comes time for action.
An Australian Securities and Investments Commission (ASIC) review of externally administered companies in the 2015/16 financial year found that, 1) the majority of these companies were SMEs and, 2) there were several common causes of their failures:
- Lack of cash flow or high cash burn rate – 46 per cent of companies,
- Poor strategic management – also 46 per cent of companies,
- Poor financial control, including lack of records – 34 per cent.
All three of these come back in some way to poor organisation – a lack of planning where cash will go, a lack of sound strategic planning and a lack of financial planning.
Consider whether you'll need to hire more people
One of the main elements of your planning will involve the decision of whether to hire more staff. If you do, and you predict the rate at which you'll be onboarding will accelerate, you'll need to ensure you have good on-boarding processes. It's not difficult to envisage a scenario where the quality of staff brought on slowly decreases as the resources to train them are spread ever thinner.
As such, make sure your recruitment and onboarding processes are capable of bringing on new staff at the rate you need them.
Running a successful small business is tough. To learn more about how working with Wilson Porter can make it easier, get in touch with us today.