Business expansion is the stage where the business reaches a point of growth and seeks other options to generate more profits. Expansion is a very important aspects of a business. This is the desire of entrepreneurs because it adds to their credibility and success story. As the owner of a small business or start-up, you may want to expand the company. This may seem daunting, but it has many advantages. Although there are drawbacks, the advantages of business expansion will offset their shortcomings.
- PROFITABILITY: Your earning power increases.
- VISIBILITY: You will be able to reach more customers who will benefit from your products/services.
- HIRE MORE EMPLOYEES: You will be able to pay your employees more (increases motivation)/hire more employees (benefit to society).
- COMPETITION: You will handle your competitors better due to your bigger size (better chances of survival).
- EAGER TO DO MORE: Seeing your business grow can add more fire to your passion as an entrepreneur.
- LOAN ACCESSIBILITY: Increases chances of getting loans and investors due to the size of the company (more credibility of the business).
DISADVANTAGES OF EXPANDING?
- Pressure to grow could cause business owners to overlook resource availability.
- Productivity and qualify are likely to drop if management and staff cannot cope with the extra work.
- Hasty staffing may lead to poor job fit and high turnover.
- A fast growth may also cause a loss of customer intimacy.
- The business may become too busy and self-absorbed to notice the changing competitive landscape and customer behaviour.
WHEN YOU SHOULD EXPAND?
- PRODUCT DEMAND: There is a proven demand for your products and/or services.
- PRODUCTS ARE VALUED: Your products and/or services are priced correctly.
- HIGH PROFITS: Profits are strong year after year, then it’s time to expand.
- COST CONTROL: Costs are consistently controlled, no spending more than budgets or accumulating debts.
- AVAILABILITY OF RESOURCES: It might be a new office space, gadgets or staffs. Be sure your resources are available and they allow room for expansion.
- Do not be scared of expanding, challenges are inevitable so brace up.