If you've been running a successful business for a while, you may be thinking about expanding your operations. This may mean offering new products and services, adding new clients to your roster or opening new locations.
Expanding your business isn't something you should rush into. No matter what vision you have for your company, it's important to have a business expansion strategy, so you're prepared for the future. Here are some things to consider before you begin making changes.
TIP: After reviewing these considerations, make a strategic plan outlining how you want to expand and how you’ll reach your goals.
1. Know what your goals are
What are you trying to achieve? Do you want to meet a certain revenue goal, work with a new type of client or expand your geographic reach?
Before making any changes, it's important to have a clear understanding of your goals so you can align your growth efforts to achieve them. Scrap any activities that don’t support your goals.
2. Do your homework
Expanding your business is a big decision. But just because you have big plans doesn't mean the market will support them. Before adding new products and services, searching for new clients or opening new locations, make sure there's a demand for what you're offering.
You can conduct customer focus groups or surveys to gain insight into what customers want, and research trends in your industry to find out where growth opportunities exist.
3. How will you maintain quality?
These days, it’s tough to hang on to customers. According to customer service software company Zendesk, 61% of customers would now defect to a competitor after just one bad experience. That means maintaining your quality and service is critical to expansion success.
If you try to do too much too fast, you risk having the quality of your products and services slip and disappointing customers. That's a surefire way to prevent them from coming back again.
Having systems and processes in place to maintain quality can help you continue delivering products and services that meet the standards your customers have come to expect.
4. How will you handle the extra workload?
You're only one person. You can't do everything alone, even if some days it feels like you do. Expanding your business will create extra work, and you need a plan for handling it because working around the clock isn't sustainable long-term.
Will you hire employees for the first time? Will you hire additional employees? How will you train new hires and get them up to speed fast?
Or does it makes sense to work with contractors until you get a better idea of the scope of the work that will continue after you put your business expansion plans into motion?
Bringing on new employees or contractors is an investment, and hiring the wrong people can cost you time and money. Figuring out exactly what the responsibilities of the new hires will be can improve your chances of bringing the right people on board the first time.
5. Be mindful of the culture
If you've been operating as a solopreneur or have only a handful of employees, it's easy to ensure the work everyone does is aligned with your business's core values.
As you grow, it becomes more difficult because everyone brings their past experiences with them. They may have different values, standards and ways of doing things than you do.
As you expand and bring more people into your business, you may need to be more explicit about your expectations and the values you want to uphold. Improving your communication, and empowering your employees to communicate openly with you, can help create a cohesive workforce that's on the same page day in and day out.
6. Identify training opportunities
If your expansion leads to new responsibilities for you and/or your employees, you may need to invest in training to get everyone up to speed. Don’t assume you'll figure things out as you go. It could end up costing you time and money.
Giving senior employees new opportunities they’re excited about and training them properly can help build loyalty and goes a long way toward retaining them as employees.
7. Review your finances
A lot of business expansion comes down to money. New business locations, new products or services, new equipment and marketing to new customers all cost a pretty penny.
And you don’t want to get in over your head too fast; there are plenty of cautionary tales of scaling too fast.
There are two main ways you can fund your expansion — tap into your cash reserves or get a business expansion loan. You may want to consult a professional to help you decide which — if any — option is better based on your current finances and the additional expenses and income expanding your business will generate.
Securing financing may take longer than you think. If you believe financing the purchase of additional equipment, inventory or other items will be part of your business expansion plans, line up your funding as soon as possible.
8. Review your insurance coverage
As your business grows and changes, it's likely your business insurance needs will too. It's important to review your coverage to make sure it will continue to provide the protection you need as you expand.
You may need to modify your existing coverage in response to the changes you have planned for your business.
For example, if you're not currently offering delivery services but want to start, you'll need commercial auto insurance to protect your business from accident-related expenses. (Your personal auto insurance will likely not cover this.)
Or, if you've been a one-person shop since you launched your business and plan to hire employees, you'll probably need workers' compensation coverage. It's required in nearly every state if you have employees.
How NEXT helps small businesses with their business expansions
At NEXT, we offer customized insurance packages for 1,000+ different types of small businesses. Coverage options include general liability, workers' compensation, professional liability, commercial auto, commercial property and tools and equipment coverage.
Our mix-and-match policies allow you to select as much or as little coverage as you need.
With our simple online application, you can see policy options, get a quote, purchase coverage and get your certificate of insurance — all in less than 10 minutes.