You started your business with a profitable idea, a small space and an even smaller group of employees. Like many entrepreneurial startups, it could have been just you and one other person in a home office or garage. But lately, that smaller space and team just don’t seem to be enough to handle the business that comes your way. If perhaps you think it’s time to expand and have some doubts, Allen Woo, an expert on growing operations, comes in to clear that picture with some key points.
Today it is common to see entrepreneurs who have been thinking about expansion and are excited about the possibilities their decision could bring. For example, the company could open another location, serve more customers, or develop new product and service lines.
As your enthusiasm grows and you gather new ideas, you’re not sure if now is the right time. According to Woo, you need to take a look at some of the signs that it might be time for your business to expand.
First of all, you need to look at industry opportunities and see if the market is picking up. If your industry is taking off, chances are your business can benefit from that growth.
Woo is certain that “changes in buying behavior, new technological developments or market forces can create expansion opportunities for existing business areas. Sometimes this means developing new products or services that rely on current products, or it may signal the need to make bolder strategic decisions.”
Nurx, a telemedicine provider that began offering contraceptives online, recently decided to offer mental health treatment options. The expansion move was the result of rapid growth in the mental health space, growing interest in telemedicine services, and a strategic decision to develop them further. While the company’s line of contraceptive services was well established, its executives recognized that patients with mental illnesses wanted the same privacy and convenience.
The increased use of telehealth services since the pandemic has also accustomed more patients to its conveniences. All of these factors provided an opportunity for a company like this to increase access to care in multiple locations and become part of the solution.
If you always have more orders and work than your employees can handle, it’s time to look at making some changes. While that may sound good, it also means you have to turn work away and that’s not the idea at the end of the day.
Alternatively, it may take longer to fulfill customer orders or reduce quality levels. Neither of these options will work in your business’s favor, leaving existing customers frustrated and disappointed. Eventually, word will spread, and negative perceptions could make it difficult to retain existing customers or win new business.
When volume, demand or customer needs exceed your company’s ability to deliver, expansion plans should be on the table. If Amazon had not increased operational levels, it would not be the online retail giant and technology solutions provider it is today.
Between 2010 and 2018, Amazon’s workforce grew from 33,700 to 647,500. This headcount growth supported the company’s expansion efforts into new markets as demand for products and services increased. While not all companies have identical demand rates, it is imperative to align internal capabilities with external expectations.
“If you’re relying on a single product line or customer for the majority of your sales, it could mean it’s time to expand,” Woo asserts. “Over-reliance on a single line of business can lead to financial problems down the road.”
If you’re a startup, this may not apply to your situation. Many companies start generating revenue with a single service, product or customer. But over-reliance can become a burden when it’s been several years since you opened your doors.
While that customer or product may generate most of your revenue right now, you have to think about what will happen when it’s gone. The customer’s needs may change, and they may decide to go in a different direction.
“While success may require some trial and error, recognizing certain signals can help business leaders make profitable expansion decisions. Your business may be ready to expand as industry opportunities increase or your volume exceeds current capacity. Other signs include an overreliance on a single product and flat sales,” the expert concludes.