How Fast Should You Grow Your Business?No Category
By Brad Egeland
Any successful small business can quickly be confronted with this question. You’re moving along well, making money, growing both your business and your dedicated customer base. Now you likely have some decisions to make.
Is your current location suitable? Does your current staff’s skill set and size still meet your needs? Will it in the not-too-distant future? Do you seek a loan from the SBA? Do you seek venture capital to grow your business? Or is it time to just “hurry up and wait”…meaning do nothing for now?
Should I Move to a Larger Location?
Is your current location beneficial to your business? Is it the right size? To know this you have to know where you’re going and what you’re customers are looking for. If you’re successful, you probably already know what your customers are looking for – at least what they’re looking for right now. But do you know what your customers’ needs will be in the next three to five years? You grow, they grow.
Let’s say you’re a technology organization and you offer technicians on demand, network setup and other offerings. If you’re growing and your customers are growing, is that still going to be your primary offering three to five years from now? That’s not likely. You may be doing server installation and setup for larger organizations or possibly outsourcing technical support personnel inside other organizations across the country.
There are a lot of possibilities, all of which will affect your location of choice and the size of your office space. The key is to not be short-sighted in your choices, but also to keep a good balance between what you can afford now and what you think you can afford in the future.
Should I Hire?
Hopefully, this concept is a little easier one to cover. Mapping out where you’re going with your business gives you an idea of the type of resources you may need to add in order to be successful and to service your growing customer base.
In the example above, acquiring experienced technicians is a given. However, you may also want to consider technicians who will be ok with travel if your 3-5 year plan includes outsourcing technicians and performing Managed Services work or Professional Services work for organizations in other locations around the country.
Skilled staff cost money…which brings us to our next question…
Should I Seek Outside Money?
You’re growing, but to get to the next phase may require an injection of money. I worked at one organization as a consultant, and we were doing great. I rescued three failed implementations for them, and they were quickly becoming successful and lauded my efforts. Then, they abruptly ended our working relationship! The reasoning behind this decision is that it made the difference, on paper, as to whether they were showing a profit or a loss and they were working with a venture capitalist on acquiring a significant amount of cash for growing the company. They needed to look profitable when the VC brought in the auditors.
You have to think these things through…VC, SBA loan, another type of loan, etc. Eventually this organization decided against going the VC route because they were going to be required to relinquish too much control of the company and its direction. It was a wise move for them. But will it be a wise move for you? That’s a question only you can answer.
Maintain the Status Quo?
Another option that is always there is to do nothing. And that is ok, too. Growth can happen slowly and still be a great thing. Hundreds…thousands of businesses have appeared to be successful and then failed fast because they tried to grow too quickly.
I nearly witnessed that happen to a friend’s construction/demolition company. He was taking on new work too quickly and needed to clone himself. Since that’s not possible, he started hiring friends as additional staff. I stayed away and just advised him, and that worked out well, and we’re still friends. The end result was he realized he was growing too fast and some of those friends had to be cut loose. You can imagine that it’s pretty hard on friendships when you have to let go of employee friends – especially when they left other jobs to come work for you. It was hard on the friendships, but he’s still in business, at least.
In the end, only you — the small business owner— can make these decisions for your organization. The best course of action is to have a plan. The old saying “failing to plan is planning to fail” is so incredibly true. Map out a plan and then monitor it against your organization’s progress. The plan can change, but managing it closely will ensure you’re aware and that you’ll never drift too far off course. Grow at the right pace for your organization and your customers.
About the Author
Brad Egeland writes for www.BusinessKnowHow.com, a popular small business Web site that provides ideas and strategies for growing a business and making it profitable. The site attracts 3 million visitors a year, contains thousands of free articles about sales, marketing, internet marketing, business finance, ecommerce and all phases of starting and growing small and home businesses. Visit Business Know-How and sign up for their free newsletter at www.BusinessKnowHow.com.