If you are a business owner, you know that it is all about sales and growth. But growth can be a double-edged sword—we have all heard horror stories of small businesses that expanded too far too fast and then crashed and burned. No one wants to be in that position, so how do you know when it is time to start growing your business? Is it all about the numbers? Here are five key benchmarks to guide you:
1. Listen To Your Customers
Do you have a loyal customer base? Great! Having a strong, solid base of repeat customers who want your products or service is a sure sign that you are doing something right. So listen to what they want—an expanded product line, an additional location, free shipping options—once you know what buyers want you can try to meet those demands with growth.
2. Are You Making A Profit?
It may sound counter-intuitive, but many ambitious business owners want to grow and expand even if they are not in the black. Not advisable. But, if you are making a profit, then it is time to think about smart growth. If your business has been steadily making a profit for at least three years, it’s a good sign of growth potential. Also, you want to ensure that you have a steady cash flow and are managing money wisely.
3. Look At Industry Or Sector Growth
Regardless of what industry you are in, you want to make sure that it can support growth. Is your market trending? Is it a spike or a long-term increase? If you cater to a niche market it is important that it is a market that’s on the up-tick, not the downslide. Steady, consistent escalation is a good indicator that it is time to grow your business.
4. Staff, Skills, And Operations
Do you have a great staff that keeps your ship afloat? Are your employees as loyal as your customers? If you answered yes, then you are lucky. Having colleagues and employees that you can count on goes a long way when considering growth, especially if that growth includes opening an additional location. Which leads us to operations. Make sure you have a proper system for training and onboarding so that you are not just flying by the seat of your pants with staff and logistics. Also, keep in mind that sometimes growth means needing a larger physical space like a new office or storefront.
5. Can You Fill A Void?
If you are in good shape based on the criteria above, one last thing to think about—is there a hole that you can fill? Often, you can meet a need for a product or service related to your current business. Keep in mind that this extension must be logical and realistic to your company and industry. Do you sell designer collars for dogs? Well, think about adding matching designer boots for Fido or a line of high-end cat collars for FiFi, especially if you notice that clients are looking for them.
Remember, you don’t have to have the hippest company or the slickest brand; if your industry or market continues to grow and so does demand, you are ripe for expansion. Although, being hip and cool can certainly help, it is more about being profitable, stable, and responsive.
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