Across the US, there exists some pretty sobering data regarding the percentage of small businesses and start-ups that fail in their first couple of years. The US Bureau of Labor Statistics has reported that 20% of businesses fail within the first year; after five years, that percentage rises to 50%, and after a decade, only 30% of these businesses remain, meaning a 70% failure rate. In light of these statistics then, the fact of the matter is that most businesses – the clear majority – never get any bigger than what is normally termed a “small business”. Therefore, if you find yourself at the point of expanding, and increasing your business scope and size into what is usually termed a “medium-sized” business, then you should congratulate yourself – most businesses do not even get anywhere close to that.
The question of how to expand your business normally only comes up when you have successfully established your business – and to have established your business means that you’re already well on your way. So what does an established business look like? Or, in other words, how do you know the time is right to expand? There could be many ways of identifying a business that is ripe for expansion. Perhaps you have established a working business premises, filled with employees, with a healthy turnover every year? Maybe you preside over an office kitted out with everything that makes a successful business look like a successful business. An office complete with all the trappings – from a copy room to fire escape signage like these and a staff room filled with contented employees. Or, if you run a virtual business, perhaps you have top-notch virtual office software connecting your team of remote workers, a virtual assistant and a website that truly looks the part.
The truth is, however, that success doesn’t have only one face – and success looks different for everybody. Accordingly, it might be worth setting out provisional criteria for success based on one overarching rationale – how can you tell the time is right for expansion? While success may look different for every business, there are some aspects of your business that will indicate to you that now is the time to start thinking about getting a little bigger, to leave behind that wasteland of failed start-ups and to put your company on the path to becoming a medium-sized business – and beyond.
When to Expand Your Business
It is pretty essential to know when the time is right for expansion. Attempting to expand a business that isn’t ready can be a dangerous game, and it could end up being more perilous for your enterprise than not expanding at all and simply waiting a while. Here are some of the easiest ways to tell if the time has come to start getting bigger.
You Have a Loyal Customer Base
The thing you should look at here is not how many customers you have, but how many returning customers you have. Repeat customers are a great indicator of ongoing demand and a demand that can be expanding. If you have some people that frequently come back for more, then why can’t you have more people doing the same thing?
Customer’s Want You to Expand
A good way to tell the time is right for expansion is to see if customers actually want you to expand. If you have a physical location, are customers travelling from far away to visit it? If so, chances are you could benefit from having more outlets.
Your Business Has Been Continually Profitable
As a rule of thumb, maybe consider waiting for three unbroken years of profitability to go by before you consider expanding. If those profits are increasing, then all the better, but keep in mind that the reason they could be stagnating is that you need to expand in order to increase them. In this case, do.
Your Industry is Expanding
Regardless of how individual businesses perform, industries as a whole are usually only going in one direction. What type of business do you run? What are you selling? Is the general, overall worldwide demand for that growing? If so, it could be time to expand.
How to Expand
So, you have checked your business against the criteria above and have concluded that the time is indeed right to expand. How do you go about it? Well, here are some of the most useful tips:
Add New Products/Services
What do you sell? Whether your business offers physical products, virtual products, or a service, could you perhaps consider selling something else in addition? This is one of the most obvious ways to expand a business – adding new offerings to sell alongside your old ones, benefiting from your established prestige and your logistical ability to distribute them.
Be careful, however, that you don’t stray too far from what you are known for. Try to avoid adding something completely different. You may be successful in one area, but it does not follow that you will automatically be successful in another, especially if customers have no reason to believe your company would be particularly adept at providing these new products or services.
Optimise Your Existing Market
Of course, instead of selling anything new, you could simply try to sell more to your existing customers. As mentioned above, one of the signs that your business is ready to expand is that customers want it to; there is a demand for more outlets or more infrastructure to distribute great amounts of whatever it is you sell to more people in more locations. You could focus your energies and resources in this direction. Sell the same thing, but more of it and to more people.
Move Into New Markets
A third way between the previous two tips might be to move into new markets. Moving into new markets means selling your product or services to different people.
This could be different demographics or locations. Check this guide on how to have a registered office address singapore.
You may need to adapt your product/service in order to do this, or perhaps the new markets are already ripe for what you are offering. When you move into a new market, you will, in a sense, be starting from scratch and trying to build up a new customer base. Nevertheless, you will be doing so with greater resources and marketing ability compared to the first time around. Accordingly, your chances of success will be higher.
Ultimately, things cannot stay still in the world of business. You cannot stagnate, as this is a sure-fire to have the market pass you by. If you think the time is right to expand out of the world of small business, then all that is left is to do it.