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IS GREED GOOD? EXPANDING YOUR BUSINESS

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.

 

In Summary

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.

 

Eamonn Garvey

Do you have a question for DCA’s experts? Contact us or connect with us on Twitter.

DCA Q&A: IS THIS A GOOD DEAL?

Q: I have a small restaurant business in a Dublin suburb. While business is generally healthy, there have been slack periods, and I’ve been researching ways to drive traffic during this time. In the course of this, I’ve had discussions with one of those ‘daily deals’ operators. What they’re proposing sounds great – a special offer that entices repeat customers – but I’ve never been involved in this kind of third-party promotion before. Is there any reason I should be wary.

 

A: You’re being smart – not just by looking for ways to drive traffic, but also in doing your homework when something sounds too good to be true. In this case, while ‘daily deals’ sites have their usefulness, there are a few pitfalls for companies that use them in the wrong way.

 

In the case of restaurants, some establishments have been convinced into offering phenomenal loss-leaders. The get a nice cheque after the deal is sold to a lot of customers, but they’re left paying for it when – over the course of several months – the deal buyers turn up to use their vouchers, sometimes taking up reservations that premium customers might have filled. More than one restaurant has gotten into financial difficulty with this situation.

 

For this reason, smart restaurant owners will take certain measures to ensure that a deal doesn’t run them out of business. Assigning a ‘quota’ – in other words, limiting the number of people that can avail of the deal in any one night – might seem like a good idea at first. However, people using a daily deal won’t want to be treated like second-class customers – that certainly won’t encourage repeat business! It’s far smarter to limit the offer to nights that you know are quiet.

 

As for the offer itself, don’t be tempted to make a loss on your meal just to drive people through the door. Do, however, try to present something unique to your establishment: many of these customers will almost exclusively use restaurants doing special offers, so you’ll have to offer something special to get them coming back. Also, try to encourage a bit of upselling – maybe don’t include wine, coffee, or a desert that will particularly tempt customers to spend more.

 

Using these sites isn’t rocket science, but they can cause problems for the naive. Just be practical, and don’t get talked into offering an unsustainable deal.

 

Do you have a question for DCA’s experts? Contact us or connect with us on Twitter.

NEW YEAR BUSINESS RESOLUTIONS

What positive business habits should you be seeking to foster in 2014?

 

Everyone has New Year resolutions, whether they state them publicly or keep them private: that is, after all, why you see more joggers out despite the January weather! When you’re running your own business, you almost certainly have a list of changes that you want to make in 2014. But which aspirations should you be prioritising?

 

Pro-Active Cashflow

Far too many businesses only take their cash-flow seriously when a problem has become apparent. By that time, it’s usually too late to fix the situation without upheaval and considerable stress. This year, paying attention to your cash-flow, even when things are going swimmingly, will pay dividends. Take action to address the situation whenever a client is falling behind, even if it’s not causing tangible problems for your business – because you can guarantee that a few clients picking up bad payment habits will.

 

Challenge Your Staff

A new year will doubtless lead your employees to take stock of their lives and careers. Also, now that Ireland has shifted into recovery mode, ambitious people have rising expectations. It costs you nothing to talk with your employees about their medium to long-term goals, and to informally discuss how they could achieve them within your business. If you can hang on to capable, motivated people, your company will benefit in immeasurable ways.

 

Show Customer Appreciation

Like your employees, your key clients will be evaluating things at this time of, and a little love-bombing – provided it’s not over the top – is worthwhile. If you can, try to organise some informal meetings with your customers to get feedback on how they find your products or services. In an open discussion, they may bring up issues that are easily fixable – and nothing helps to cement a business relationship like a problem solved.

 

Learn to Delegate

If you are running a small business, you are always tempted to do everything – from sales to delivery and cash collection, you instinctively feel that you are more capable and invested in tasks than your employees. But there’s a reason why you have a team: you can’t do it all. If you are going to enjoy any work-life balance in 2014 – and have time to work ‘on’ the business rather than ‘in’ the business – then you need to trust people to get on with their jobs. Some oversight and accountability for targets is helpful, but trying to do everything will frustrate competent employees and run you into the ground.

 

Tap Into Technology

Sheer inertia keeps many businesses from using technology to work more productively. A fear of substantial front-end investment also deters some owner-managers, but many useful business tools require little or no spend to set up. UsingGoogle Docs to collaborate on documents, a tool like Asana to assign tasks and responsibilities or even Skype for instant message conversations when working remotely will save your business a lot of time and be very simple to adopt. So investigate the possibilities of free or cost-effective applications and technology this year.

 

Businesspeople are realistic: 2014 won’t mark a return to the days of easy money. But making these positive changes should help your company improve markedly for the new year.

 

Do you have a question for DCA’s experts? Contact us or connect with us on Twitter.