Should I Grow My Business?

“Warp Speed Growth” author Peter Meyer stated that businesses cannot capture every customer and sale, nor should they want to.

His research showed that only 29 percent of the business market leaders were also some of the most profitable. Which leaves a whopping 71 percent of the business profits in the hands of those businesses who were not on top of their market.

Which side would you prefer?

Growing Your Business

While you may think that growing your business isn't even a thought to reconsider, you may want to. Just because you CAN grow your business, does that really mean you SHOULD?

Here are a few things to know about growing a business:

●  Just because there is a higher profit, doesn't mean your team can handle to extra volume.

●  You are not going to be able to fix some problems by higher profits and sales, such as organizational difficulties.

●  You are a customer-based business, so keep their wants in mind. Do they want a bigger, better store? More inventory? If not, you stand to lose them with change.

●  Being #1 doesn't always equate to a higher profit margin. See the Peter Meyer statistic in the introduction to reinforce this in your mind.

Loans for Business Growth

If you've made a decision to grow the business and you need more capital, you may need to look toward a business loan. These loans can put an influx of liquid capital at your disposal to buy inventory, upgrade fixtures or equipment, or finance a large advertising campaign.

Most companies that loan to business owners, however, are going to want to see a completed business plan that plots out how you are going to use the money lent, and when you project to see the money that was invested start turning profits. This is called a return on investment (ROI), and banks and lending institutions are going to want to see this fairly quickly, within the first five years on average.  

Expanding Too Soon

Some businesses will try to expand at breakneck speed, growing too quickly for its needs.

They may break out into new "add-on" markets, or try to go from a successful niche market to a one-size-fits-all super market. This is typically never a good idea. First off, your customers are your customers for a reason, whether they dislike the alternative or just prefer the closeness and one-on-one feeling they get from your business. If you are going to keep these customers, your growth best be slow enough they don't notice.

Another reason fast expansion rarely pays off is because the money quickly becomes tied up in these other projects, employees feel overwhelmed, and your company falters. With big boom expansion, your company doesn't have time to properly research the market and make adjustments for the individuality of your business.

Whether you decide to keep your company just the way it is, or if you want to see growth in the next X number of years, always have a well thought out plan and provisions in place should the growth be more cumbersome than you thought.