It takes a while to start a business and to get it established. And, eventually, the time comes when you need to decide whether to continue to run your business as it is or is your business ready to expand? This will partly depend on what you intend to do with your business, and what your exit strategy is.
Making sure it’s the right time
Trying to grow too early or trying to grow when your business is busy with other things, such as the development of a new product, can be a mistake and can lead to failure.
Choosing the right type of growth
You can grow organically – by selling your existing products to new markets or by selling new products to your existing customers – or you can grow rapidly by buying another business or location for your business. Most businesses that grow successfully do so by working out what they do well and then doing more of it, so it is essential to know what your strengths are.
Advantages of Business Growth
If you are a larger business, it means you can take advantage of economies of scale. Larger businesses can often get discounts by buying in bulk and getting better credit terms from suppliers. Another benefit to growing your business is that some people believe that larger businesses are more secure than smaller businesses and are more likely to be around throughout the lives of their products to supply spare parts and consumables and to honour guarantees and warranties. If you grow your business, you are likely to sell more products and services to this market. A larger turnover can also mean a greater potential for profit, which is always a good thing.
Disadvantages of Business Growth
Larger businesses tend to be more complex than smaller businesses. This can make the management of the business more time-consuming and expensive, which means that you may need to delegate some, or even all, of the management duties. As a result, you can lose some direct control of your business when it starts to grow.It can also be more difficult to give personal service as your business grows. As a small business you can provide a one-to-one service to all of your customers, but as you grow you might not be able to deal with every customer yourself. You may need to make alternative arrangements such as recruiting extra customer service staff, the introduction of specialized software, or providing extra training for your existing staff.There may also be cash flow problems and you may need to borrow money to buy new premises and equipment. Also, if you plan to sell more products you will need to spend more money upfront to make them.