By Brian Griffin
I get asked this question all the time, and the answer is – there’s a lot to consider when deciding to make the leap to expansion. Here are four “W questions” that can guide your decisions.
Why do you want to expand?
This is the million dollar question as it can be a turning point for your business. It’s worth examining what’s triggered your perceived need to expand – industry trends, competitive opportunities, self-motivation? Utilize your resources and contacts to fully vet the “why”.
What are your goals?
Remember that old adage, measure twice and cut once? The same holds true for your business. In order to develop a good growth strategy, you first need goals against which to measure. What are your desired outcomes – increased profitability, customer base growth, innovation, or all of the above? Define your goals, and apply metrics to measure progress and your success while also objectively evaluating how well you’re meeting your current goals.
Leverage the SMART model of goal planning: specific, measurable, action-oriented, realistic, and timely results.
When will you expand?
One of the most important considerations when planning your expansion is timing. Create a strategic plan that evaluates where you want to be in six months, one year, five years, and 10 years. Include cash flow analysis and other financial forecasting in your strategic objectives to determine the feasibility of expansion.
Who will help you, and what resources do you have?
Utilize your network of advisors and ask for guidance. Consider your existing resources, both from a personal and financial perspective, to help identify any weaknesses or potential challenges that exist in your plan. Consider contacting other business owners in a similar industry (perhaps in a different geographic area) for advice on how they successfully expanded their own business.
Would your employees be able to accomplish their current workloads plus any additional projects or work needed to expand? Additionally, what are the financial capital requirements needed to expand?
Would your current employees accommodate more work post-expansion, or would you need to hire additional employees?
Aside from adding employees, expanding can be costly. Expenditures such as, real estate costs, attorney fees, additional or new equipment, employee recruitment, training, and marketing campaigns are all things to consider. While expanding may result in more revenue, you may not recapture your expansion costs for a lengthy period of time. Ask yourself if the cost will be justified by the profitability of the expansion.
Brian Griffin is the Senior Vice President of Commercial Lending at Rockland Trust and he can be reached at 508-771-5540 or Brian.Griffin@Rocklandtrust.com