If you’re running a successful business, you may well want to expand. But is it always a sensible decision?
Is It What You Want?
Starting a business is a risky proposition, and the statistics on how many start-ups ever make a profit make eye-watering reading. But when you were navigating the doom, gloom and paperwork to get your business venture off the ground, how did you envision it in your mind’s eye? You may have seen yourself presiding over a large company, in which case expansion makes complete sense for you.
But you may have set up your business with the sole aim of providing yourself with a wage, the freedom of being your own boss, or exploiting a gap in the market to do something that you really love as your profession. If you are happy with the status quo, or the idea of taking on more responsibility and potential debt makes you feel sick to your stomach, then perhaps this is not a good course of action for you.
Will it Damage Your Brand?
For some reason, it is assumed that if you have a successful business then the only prudent thing to do is expand. But just because other people think it’s a sensible thing to do, doesn’t mean that it actually is.
Sure, there are a lot of pluses to expanding your business. But there are an awful lot of potential risks to take into consideration. Will your unique selling point, the aspect that has made your business this successful, translate to a bigger market? If, for example, your disarming personality puts clients at their ease, an expansion could mean that you can’t be physically present for every job. While clever recruiting could go some way to ameliorating this, it may mean that your USP vanishes, and with it repeat business as your customer begins to see you as interchangeable with other companies.
Will Expansion Spread You Too Thin?
Expansion inevitably involves taking on more staff, but you may need to take on extra work yourself while you wait for the cash to do so, or during the transition phase. As people who run their own business tend to work longer hours on average than salaried employees, this may further eat into your free time.
Also, spreading yourself and your staff too thin may lead to mistakes which could damage your core business.
Do you have the skillset?
If you’re considering expansion then you’re obviously good at what you do. But managing a larger business requires specific skills. Managing a team from a distance or through middle management can be harder, and calls for a lot of extra documentation and company policies. This may be right up your alley, but it isn’t everyone’s strength and merits consideration.
Expanding your business has the potential to deliver big rewards, but also involves risk. Not just to the loans needed for expansion, but to your core business. Think hard about the risks involved. If it doesn’t make sound business sense on paper, and the idea of it doesn’t excite you, then stay as you are. And always make sure that you’re bolstered by solid advice at every stage of the process.