The decision to grow a business can be complicated and often very personal. All large businesses started small at some point, but it’s not always clear that expansion is desirable or even possible. Sometimes it can be outright disastrous if the strategy is flawed or not aggressively executed and managed.
Some small business owners want to keep their business that way ––– small. If you’ve thought about expansion but have been reluctant to take the plunge, it’s useful to step back and objectively analyze what it takes to make it happen. If your existing resources have limited further organic growth, there are a few options that can be considered: buying another complementary company, merging or forming a strategic alliance with another company, or developing new products or services.
None of these options are simple or straightforward and each carries its own potential risks and rewards. Conquering such a challenge requires a comprehensive analysis and evaluation of the competitive landscape, as well as a critical analysis of your own capabilities. Then a plan for growth is needed that defines exactly what that growth means for your specific business. Depending on the path you choose, it might involve relinquishing some amount of control over your business.
Steve Jobs famously refused to use market research. “Some people say, ‘Give the customers what they want.’ But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d asked customers what they wanted, they would have told me, “A faster horse!”’ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
Easy for him to say. Unless you’re in the same league with a genius like Jobs, you may want to analyze your existing market and potential new markets before sinking money into an expansion plan. It’s helpful to identify emerging trends that will shape the future marketplace and use that information to identify new opportunities for products or services. Use the Internet and social media to alert you to shifts in the marketplace and help you exploit a niche that isn’t being satisfied. If possible, make changes on a small scale before fully committing yourself.
Don’t fall prey to “analysis paralysis” or the tendency to overanalyze every detail to the point where no decisions or actions are taken. Take all the information you have and make the best decision based on what you know.
If you’ve reached your maximum capacity to deliver existing products, you’ll need to hire help to expand. If you’re a sole proprietor, this imposes a major change in the way you operate. Having employees unleashes a whole range of issues and governmental mandates that affect your business every day.
Before hiring a permanent employee, consider using contract labor from a temporary agency. This gives you an opportunity to evaluate the benefits that an additional person can provide without taking on full responsibility of an employee. Make sure the person is trained for the role you have planned, but they may still need some on-the-job training for their specific tasks. You’ll need to provide workspace, equipment, and supplies so the cost of each must be included in your operating plan.
Keep in mind that internal growth and expansion of your customer base requires a significant diversion of your time and energy. This means that your existing customers will likely detect a drop in the amount of personal contact and attention you’re currently providing them. You don’t want them to feel neglected because they’ve counted on you heavily in the past. Sharing that time and energy is a real challenge and not to be taken lightly.
The complexity and size of your expansion plan will determine the need for additional resources. It’s important that this assessment occur very early in the process. If people need to be hired, that will take significant time and effort. For a small business, adding staff is a big deal. That’s because you don’t have the luxury of absorbing someone who isn’t a perfect fit. You must assimilate people quickly and efficiently so that they have an immediate impact to your bottom line. Contrast that with a large business which can move people around or retrain them until they find a job that suits their skills and potential.
If you plan to develop and produce something entirely new, you’ll need to invest in both people and equipment. If you don’t have the expertise needed to find and secure the right resources, get someone to help you who has that experience. You need to keep your eye on your existing business and ensure that it continues to thrive. If most of your time is consumed by the expansion efforts, things will fall through the cracks and your loyal customers will take notice.
It’s important that whatever you do complements the culture and goals of your company. This is especially important if you’re considering a merger or acquisition. You want the combination to be as seamless as possible, both from a business and people perspective. Compatibility is key to matching the talents and capabilities of the businesses in terms of both what they do and who they are.
Be careful not to let emotion cloud your judgment about expanding your business. It’s hard to avoid because it’s your “baby” and you know what’s best, right? Maybe you do, but this is business and an objective assessment of what you’re getting into is critical. If you’d get a second opinion before having major surgery, then it’s perfectly reasonable to get an outside opinion or two about your business plans. Talk to people you trust and who have the right kind of experience to advise you. You don’t have to take their advice, but it doesn’t hurt to listen.
Support is available through sources such as the Small Business Administration and the Service Corps of Retired Executives (now known as SCORE, Counselors to America’s Small Business). You’re already dealing with competing priorities and multiple challenges, so don’t hesitate to seek counsel from such experts.
Develop a step-by-step plan for expansion, but don’t get married to it. Don’t be afraid to walk away if you find out down the line that it’s impractical or beyond what you can implement successfully at the current time. Be open to change that maximizes your future potential and aggressively investigate and pursue the best options as you push forward.
Small businesses expand all the time, but many of them don’t make it because they bite off more than they could chew. If you do your homework, proceed deliberately and remain objective, you can make it happen. You’ve got a reputation to protect, so keep that at the pinnacle of your priority list.