Is Now the Time for My Business to Expand?

The question of when to expand will be different for every small business.

If you're considering growing your small business, you'll need to do some number-crunching and research to determine whether your company is ready.

Here's some information to help you make your decision:

Potential Problems

Several problems can arise if your business expands too quickly or too soon.

Your business may outgrow your working space, causing a drop in efficiency as you and your employees run out of room. You may also see a drop in morale if your employees start feeling stressed from the extra workload.

As you try to keep up with increased demand, your quality may decline, adding customer complaints into the already stressful mix. This can further hurt office morale, resulting in employee turnover and declining productivity.

So how can you avoid this vicious cycle?

Make a Plan

Preparing and planning go a long way toward making your business expansion a success. Take the time to assess your business and current operations.

Have you maintained a consistent profit and steady growth for at least the past five years? Do you have an excellent management staff and administrative setup that can handle setting up a new location? Do you have the funds for expansion -- or a plan for getting financing?

Taking the time to fully assess your current business and its growth history will help you figure out if you're really ready to expand.

Once you've done that, how do you go about expanding?

Open a New Location

While this option isn't financially feasible for some small businesses, it's often the first thing that comes to mind when you consider expanding. You'll need to come up with a business plan for the new location, including market research if you're adding a branch in another city.

You'll also have to have excellent managers who can move to the new location, hire new staff, and get the branch up and running.

Diversify Your Product Line

An easier expansion method for small businesses without the capital to open a second location, diversifying can increase your bottom line. Start by selling products or services that complement your current product line, aimed at your current customer base. You can also come up with a completely new product line that's related to your original offering.

Another great way to diversify your business is to find new groups of customers to whom you can market your product or service. This could mean appealing to a different age group, or marketing to other businesses in addition to consumers.

Finally, you can try building a new product line and marketing it to a new customer base. This is a riskier option, however, so be sure to do thorough market research before putting time and money into product development or advertising.

Small business expansion can be confusing and stressful, but may be well worth it in the end.

Through careful planning and research, you can reduce your chance for problems -- and increase your chance of successfully growing your company and your bottom line.